SECURITIES AND EXCHANGE COMMISSION
                           Washington, D.C.  20549

                                  FORM 10-KSB

[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
    OF 1934

                For the fiscal year ended December 31, 2000

[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
    OF 1934

   For the transition period from ____  to  _______

Commission File No. 1-10623

                               Pamet Systems, Inc.
                  ____________________________________________

                 (Name of small business issuer in its charter)

       Massachusetts                                    04-2985838
 ______________________________                    _____________________

(State or other jurisdiction of                     (I.R.S. Employer
incorporation or organization)                     Identification No.)

     1000 Main Street
     Acton, Massachusetts                                01720
 ______________________________________            _____________________
(Address of principal executive offices)              (Zip Code)

Issuer's  telephone number   (978) 263-2060
                             ______________

Securities registered pursuant to Section 12(b) of the Exchange Act:

 Name of each exchange                             Title of each class
                                                   on which_registered

                 none                                      none
 ______________________________                    _____________________
                                                      (Title of Class)

Securities registered pursuant to Section 12(g) of the Exchange Act:


                       Common Stock $.01 par value
                       ____________________________
                           (Title of Class)

Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
                                                     Yes   X   No
                                                          ____ ____

Check if there is no disclosure of delinquent filers pursuant to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB.                               [ ]

The issuer's revenues for its most recent fiscal year were  $2,046,007

The aggregate market value of the registrant's common stock held by
non-affiliates of the Company, based upon the average of the closing bid and
asked prices on April 13, 2001 was $1,773,683.

The number of shares outstanding of the registrant's common stock, as of April
13, 2001 was 4,186,110 shares.

Documents included by reference:   If the Registrant's definitive proxy
statement is filed within 120 days of the close of the Registrant's fiscal
year ended December 31, 2000, the information called for by Items 9, 10, 11,
and 12 shall be deemed incorporated herein by reference to the Registrant's
definitive proxy statement relating to the Annual Meeting of Stockholders.


<PAGE>


PART I

Item 1. Business

        This Form 10-KSB contains statements that are not historical facts.
These statements may constitute "forward-looking statements" within the
meaning of the Securities Act of 1933 and the Securities and Exchange Act of
1934 as amended.  Certain, but not necessarily all, of such forward-looking
statements can be identified by the use of such words as "believes",
"expects", "may", "will", "should", or "anticipates" or the negative thereof
or other variations thereon of similar terminology, and/or which include,
without limitation, statements regarding the following: competition and
consolidation in the public safety marketplace; market expectation for the NT
operating environment and customer acceptance of the Company's NT products;
ability of the NT product to meet market needs; volatility in sales and cash
flow; growth potential in the year 2001; law enforcement trends; availability
of grant funding for customers; adequacy of funding and corporate
infrastructure to support operations and anticipated growth; economic and
competitive factors affecting the public safety market; and discussions of
strategies involving risk and uncertainties that reflect management's current
views. These statements are based on many assumptions and factors and may
involve risks and uncertainties.  The actual results of the Company or
industry results may be materially different from any future results expressed
or implied by such forward-looking statements because of factors such as
insufficient capital resources to operate the Company; inability to
successfully market and sell the NT product; changes in the marketplace
including variations in the demand for public safety software; and changes in
the economic and competitive environment.  These factors and other information
contained in this Form 10-KSB could cause such views, assumptions and factors
and the Company's results of operations to be materially different.  We
undertake no obligation to update publicly any forward-looking statements for
any reason even if new information becomes available or other events occur in
the future.

        Pamet Systems, Inc. (the "Company" or "Pamet Systems") develops,
markets and supports computer software for organizations in the public safety
and criminal justice sectors.  The Company's products automate the
acquisition, storage, processing, retrieval and communication of information
for these organizations.  The Company's customers include law enforcement
agencies, fire fighting agencies, and corrections facilities.

        The Company's principal product for the law enforcement market is
PoliceServer NT (, a fully integrated information management system, which was
totally redesigned and released to the Windows NT platform in 2000.  This
redesign changes the Company's entire suite of products, which includes the
core PoliceServer NT, FireServer NT ( and CADServer NT ( products, to a new
Windows user interface and completely redesigned backend database.
Significant enhancements continued to be made to the products throughout 2000
and will continue into the first half of 2001.

        PoliceServer NT provides law enforcement agencies with the full
spectrum of information-related functionality needed for agency operations and
management.  Designed primarily to serve agencies with fewer than 500 officers
(99.4% of US police agencies), current users include both municipal agencies
such as the Worcester, Massachusetts Police Department and other agency types
such as the University of Massachusetts Police Department, the Metropolitan
Atlanta Rapid Transit Authority (MARTA) Police Department, and the McMinn
County Tennessee Sheriff's Office.  Capabilities of PoliceServer NT and its
associated modules include criminal records management, department management,
and advanced reporting.  Designed to accommodate a wide diversity of agency
types, PoliceServer NT is both easy to learn and to use.  PoliceServer NT
automates many of the complex and time consuming department functions such as
arrest booking, crime analysis and reporting, and case management.  A number
of interfaces are provided to other data sources such as the E911 network,
various state Criminal Justice Information Systems, and the National Crime
Information Center.  The Company also provides interfaces with systems for
digital imaging, mobile/remote access and scanning and identification of
fingerprints.

        FireServer NT provides equivalent functionality for fire fighting
agencies.  An upgraded, Windows NT version was released during the period,
with the first implementation beginning in the second quarter of 2000.  The
fire records capability provides fire departments with data on structures,
fire suppression plans, inspections data, and hazardous materials.

        CADServer NT (Computer Aided Dispatch) was designed with a "look and
feel" similar to that of the PoliceServer NT and FireServer NT.  The new
CADServer NT went into live operation during the fourth quarter of 1999 and is
marketed as a separate product, rather than offered as a component of the
police or fire records management system, as it was in earlier versions.

The Company also offers several companion products.

* The Mobile Access module is a mobile terminal that allows fully integrated
communications with a department's internal system as well as other local,
state and federal databases.  Mobile improves officer efficiency, allowing the
departments to realize cost savings, increase officer safety, and enhance
community policing efforts.
* Imaging is a digital image capture, storage and printing system.
* Mapping module displays maps for dispatchers and creates pin maps for crime
analysis.
* The Advanced Reporting module facilitates the creation of both standard and
ad-hoc reports from data in the PoliceServer NT database.
* JailServer( provides corrections facility staff with the ability to capture,
track and report a wide variety of data related to inmates.
* Investigator's Tool Kit extends the Company's expertise into a laptop based
crime scene tool kit, which may be used in a stand-alone configuration or in a
dockable mode.

        The Company believes that the level and quality of its customer
support is vital to continuing customer satisfaction and the long-term success
of the Company.  The Company has established a strong history of
responsiveness to customer requirements and a high level of support, which
have resulted in a loyal customer base.  The Company provides product
enhancements and customer support services under an annual maintenance
program.  Annual fees are based on a percentage of the price paid for the
licensed software products.  Historical renewal rates for annual maintenance
for the Company's products have been in excess of 99%.

        The Company's primary customer support center is located at the
Company's headquarters in Acton, Massachusetts.  The Company also maintains a
customer support office in DeBary, Florida, currently serving principally
JailServer customers.  The standard customer support service provides access
during business hours Monday through Friday, with a 24-hour, 7-day customer
service option.

        As of December 31, 2000, the Company had installed PoliceServer in 105
police departments, FireServer in 31 fire departments, JailServer in 6
institutions, Imaging in 50 departments, Mobile in 47 departments, Advanced
Reporting in 29 departments, and the Mapping module in 5 departments.  These
installations are located in 12 states in the Eastern, Midwestern and
Southeastern U.S.

        In the 12 month period ended December 31, 2000 a significant portion
of sales to police departments was funded by federal grants associated with
the "Violent Crime Control and Law Enforcement Act of 1994" (the 1994 Crime
Bill) designed to provide automation grants to law enforcement agencies. In
general, however, the long lead-time and uncertainties of selling to the
governmental sector continue and will continue to result in volatility in
sales and cash flow, as discussed in the Management Discussion and Analysis.
The Company continues to evaluate mergers, acquisitions and other business
combinations, as well as capital raising alternatives to enhance its working
capital.

        The Company was incorporated in Massachusetts on November 24, 1987.

        PoliceServer, PoliceServer NT, FireServer, FireServer NT, JailServer,
and CADServer NT are trademarks of the Company.

        The Company's principal executive offices are located at 1000 Main
Street, Acton, Massachussets 01720


Business of the Company

        Public safety agencies are paper-intensive organizations, which manage
large amounts of information in their day-to-day activities.  These agencies
must collect, process, file and retrieve such information quickly,
conveniently and cost effectively.  Traditionally, police and fire departments
have performed these tasks manually, resulting in significant resources and
man-hours being spent processing and locating documents in large, sometimes
haphazardly maintained, filing systems.  Critical information can be
inadvertently lost or misfiled and can only be accessed by one person at a
time.  In an attempt to more efficiently manage information and to improve
personnel productivity and response time, many public safety agencies have
computerized certain aspects of their business practices.

        Corrections facilities face a similar requirement to maintain
information on the inmates under their custody.  In addition to background
information and information on current status and assignments, there is a need
to maintain readily accessible data on inmate health and to account for and
control inmate funds.  Corrections officials must have ready access to data on
all aspects of inmate life.

        The Company believes that the market for the computer systems it
provides continues to be positioned for growth due to a number of major
factors.  The first factor was the passage of the 1994 Crime Bill which has
allocated more than $33.0 billion of funding for police and prison agencies
over the first five years of the grant program, of which over $1.0 billion as
been targeted for the automation of police agencies. In 1999 an additional
$330M was allocated to automation as part of a follow-on Community Policing
bill.  Although the majority of the funding from the 1994 and the follow-on
Crime Bills has been earmarked for additional police presence on the street,
automation and computerization of police agencies is encouraged if it can be
demonstrated that this investment will allow additional police resources to be
"put back on the street".  Subsequent to the end of the period the Department
of Justice announced a 2001 grant for a total of $81M that is to be allocated
exclusively to technology. The Company has designed and implemented a series
of seminars to provide departments with the information necessary to
demonstrate the cost effectiveness of the Company's products to enable them to
obtain grant monies.  The second factor is E911 systems currently being
established around the country that require 24-hour dispatch centers for
police, fire and EMS departments.  Many smaller communities have not been able
to afford to staff a dispatch center 24 hours a day.  This has led to the
establishment of regional dispatch centers serving a number of communities.
This regionalization requires computer systems to enable the regional
dispatchers to have timely access to the information needed to respond to
varied situations in a diverse geography.  The Company's products are designed
and marketed with the option to be used in this type of regional application.
Currently six regional dispatch centers in Massachusetts, Georgia and
Tennessee use the Company's product for this application.  The third factor is
the use of mobile technologies.  The last factor is the focus of many
departments and municipalities to modernize their computer resources to
standard Windows based applications.  Given its existing product base and the
completed redevelopment of the PoliceServer NT and FireServer NT on the NT
platform, the Company believes that it is well positioned to meet these needs
with its suite of new NT based products.

        Additional factors affecting the business include the following: the
emphasis municipalities are currently placing on crime prevention; the trend
among public safety officials towards increasing effectiveness of operations
through computers; the pressures to control personnel costs, which account for
a major portion of municipal budgets; the need to achieve higher personnel
productivity due to local budgetary constraints; and the availability of
computer hardware that does not require special environmental systems and can,
in fact, be used in a remote location such as a police cruiser.

        The corrections market also continues to grow in response to the need
for prison space as well as continued pressure for economies in prison
operations.  There is also an active trend in the corrections sector to move
from older, main frame systems to more cost-effective computing platforms.


Products

        General:  In an effort to meet the demands of its market, which
consists of approximately 15,000 police departments and 5,000 fire departments
nationwide, the Company has not only developed proprietary software but also
offers its customers complete systems.  The Company provides the customer with
software, training, support, installation and initial maintenance for its
products for an all-inclusive price.  The Company also sells hardware upgrades
and supplies.

        The Company has developed and actively markets a series of integrated
software products: PoliceServer NT, a management information system for police
departments; FireServer NT, a management information system for fire
departments; CADServer NT, a real time automation product for Communication
and Dispatch Centers; Imaging, an image capture, storage and printing system;
Mobile Access, a mobile computer allowing fully integrated communications with
the department's internal system as well as other local, state and federal
databases; a Mapping system for dispatchers and crime analysis; the Advanced
Reporting module for creating reports with data in the PoliceServer NT and
FireServer NT database, and JailServer NT, an information management tool for
corrections facilities with the  capability to capture, track and report data
on inmates; Investigator's Toolkit, a systems that enhances the information
gathering process at the crime scene and accelerates the distribution of
critical information such as search and seizure warrants. The Company owns the
full and exclusive rights to the PoliceServer NT, FireServer NT, CADServer NT,
Imaging, Mapping, Investigator's Toolkit, and JailServer NT products.  The
Mobile Access product incorporates technology licensed from Cerulean
Technologies.

        Before 1998 the Company's software was developed to run on the Digital
Equipment Corporation's Open VMS(r) operating system together with
character-based terminals or personal computers emulating character-based
terminals.  Due to customer demand for software utilizing Graphical User
Interface (GUI) displays and low cost servers, the Company began in 1997
re-developing its software for Windows NT (r) and Windows 2000-based servers
and Windows 98 (r), Windows NT(r), and Windows 2000 Professional(r) client
Personal computers. The Company delivered the first versions of PoliceServer
NT and FireServer NT in 1999.  The Imaging, Mobile Access, Mapping system,
Advanced Reporting, Investigator's Toolkit and JailServer products have always
been Windows PC-based products.  The Company has committed to fully support
the existing VMS customers until June 2002 on a program basis to give them an
adequate window of time to budget and plan for the migration to the Company's
suite of NT products.  Some of the Company's computer systems are considered
turnkey and can include networked personal computers, networking equipment,
printers and bundled proprietary software, all of which the Company purchases
from other companies and sells to the Company's users.

        PoliceServer NT:  PoliceServer NT is part of a comprehensive suite of
law enforcement applications software that performs the clerical and record
keeping functions necessary for police department operation.  PoliceServer NT
includes an incident reporting function, which assists dispatchers in
allocating and controlling resources and logging and reporting incidents, and
performs automatic checks for outstanding arrest warrants and gun permits.
The system's functions include an arrest booking system which collects, stores
and reports data on arrests from the time of arrest through court appearances.
The system also automatically produces and prints all reports, forms and other
documents needed in connection with a booking.  Other functions create and
maintain records with respect to arrest warrants, alarm systems, citations,
licenses, permits, property, equipment and vehicle maintenance.

        PoliceServer NT automatically cross-references and updates all
appropriate files in the database.  This feature eliminates the need for
repetitive input, saves people-hours, and ensures the timely and consistent
updating of police records.  The system provides multiple levels of security
controls, which the Company believes limit the likelihood of tampering with
police records.

        An important feature of PoliceServer NT is ease of use.  Current
customers find the system easy to learn and operate.  PoliceServer NT is
designed to be used by any member of the department to expedite the handling
of departmental paperwork.  PoliceServer NT eliminates much of the manual
process, replacing it with a series of simple interactive entry screens.
Computerizing these processes reduces paperwork, ensures more accurate data
entry, and makes information available more rapidly to other members of the
police department.

        FireServer NT:  FireServer NT relies on the design approach taken with
the PoliceServer NT and performs a number of similar functions.  Like
PoliceServer NT, the FireServer NT system assists in the logging and reporting
incidents, as well as providing access to the CAMEO (Computer Aided Management
of Emergency Operations) Hazardous Materials database.  In addition,
FireServer NT permits a dispatcher using CADServer NT to immediately print a
fire suppression plan for use by firefighters at the scene, including incident
location information; orders for first arriving units; emergency contact
information; structure type, size and usage data; identification of any
permits, inspection violations or hazardous material at the site; and
identification of individuals with special needs known to reside at the
incident address.  FireServer NT's other functions create and maintain records
with respect to hydrant location and history; permits; inspections;
violations; street box and building alarm systems; personnel; payroll;
property; equipment; and vehicle maintenance.

        CADServer NT:  CADServer NT, designed with a "look and feel" similar
to that of the PoliceServer NT and FireServer NT, was also developed in 1999
in order to support integrated E911 dispatch centers.  CADServer NT enables a
dispatcher to have immediate access to all pertinent information that is
necessary to safely and efficiently administer a call or incident.  The
dispatcher has an overview of all the incidents that are current as well as
all the units in his or her control.  In addition, the system will display the
required units that should be dispatched to an incident and will continue to
update the status as changes occur.

        JailServer NT:  JailServer is an integrated technology solution
utilizing barcode and video imaging technologies to ensure effective
collection, processing, and output of information for correctional
institutions.  JailServer NT modules include tracking of inmate booking,
arrest, housing, trusts accounting, medical, commissary, property, and
visitation.

        Imaging:  Imaging is an image capture, storage and printing system
that handles color or monochrome photo images (mug shots, crime scene etc.)
and document imaging.  The product is fully integrated with the PoliceServer
NT, FireServer NT and Mobile Access systems.  It supports unlimited numbers of
images connected to Master Name File entries.  Images can be captured using
digital cameras, video cameras and scanners.  Incident or accident related
images can be stored as part of the PoliceServer NT or FireServer NT databases
and are related to incident reports, arrests or other investigations.  Images
can include photo images or document images.  Images can also be associated
with property and evidence and with department personnel files.  The system
has been designed for compatibility with new Federal standards (NCIC 2000),
and will be evolved to maintain such compatibility as NCIC 2000 specifications
evolve.

        Mobile Access:  Mobile data terminals (MDT's) are fully integrated
companion products to the Company's other products.  Based on the private
branding agreement with Cerulean Technologies, the Company is able to offer a
mobile data product that has many of the "Best in Class" mobile data
capabilities.  The MDT is a laptop PC mounted in a patrol car or carried as a
briefcase, together with wireless communications equipment.  The product
allows communications from car to dispatch, car to car, as well as access into
the files in the PoliceServer NT or FireServer NT databases and many
government information systems.  In addition all messages are fully encrypted
and many officer safety and alarm features are standard in the product.  This
system increases officer efficiencies and minimizes the need for the officer
to return to the station.  This system has also served to increase the police
presence on the street, due to the fact that an officer, in the cruiser, has a
link to the state CJIS information system and full access to all of the
information in the entire PoliceServer system.

        Mapping:  The Mapping module allows the dispatcher to view maps of
street addresses, incident locations and building floor plans.  It also can be
used to create pin maps showing the location and concentration of crimes and
other events, such as traffic accidents.  The Mapping system can also assist
in the early identification of crime patterns.

        Advanced Reporting: The Advanced Reporting module allows analysts to
run a fully integrated report writer, Crystal Reports from Seagate Software,
against the PoliceServer NT, FireServer NT or CADServer NT databases.  This
can be used to create standard reports or run ad hoc queries using the
tremendous volume of operational data captured during the day-to-day
operations of a department.

        Investigator's Toolkit:  The Investigator's Tool Kit extends the
Company's expertise into a laptop based crime scene tool kit, which may be
used in a stand-alone configuration or in a dockable mode. The toolkit
enhances the information gathering process at the crime scene and accelerates
the distribution of critical information such as search and seizure warrants.

        Product Pricing:  Complete systems including software, training, one
year's hardware maintenance (provided by the hardware vendor when hardware is
provided), and six months of software support and update service, including a
warranty against defects in the software, have sold for between $28,000 and
$300,000, with most sales falling within the $50,000 - $100,000 range.
Pricing of the FireServer NT base product is priced at slightly less than the
PoliceServer NT package for an entry-level system.  The majority of FireServer
NT or the VMS FireServer systems in operation utilize the same computer as the
PoliceServer NT or VMS PoliceServer systems in that municipality.

        In addition to revenues generated by sales of the PoliceServer NT,
FireServer NT, CADServer NT, JailServer, Imaging, Mapping, Advanced Reporting,
Mobile Access, Investigator's Toolkit and software support fees, the Company
generates operating revenues from the sale of services such as system
performance evaluation and tuning, as well as consulting on system design.
Additional revenues come from sales of miscellaneous supplies, accessories and
training.


Marketing

        The Company's marketing strategy is designed to attract potential
customers from the existing base of law enforcement agencies, fire agencies,
and correctional facilities.  The Company utilizes live demonstrations of its
products, conducted in a way that emphasizes the operational features of the
products rather than the underlying technology.  Seminars are held at various
facilities selected to allow potential customer representatives to see the
products in a relaxed, neutral environment.  The 1994 Crime Bill also provided
another marketing avenue as the Company conducted seminars to assist public
safety agencies obtain grants, which brought agencies together and provided an
opportunity to demonstrate the Company's capabilities and products.

        The Company generally concentrates its marketing efforts on the police
departments using the integrated PoliceServer NT, CADServer NT, Imaging,
Mapping, Advanced Reporting, Investigator's Toolkit and Mobile Access systems,
with approach to the fire department following success with the municipality's
police department.  In locations where the police and fire departments are
incorporated in a single Department of Public Safety, the Company's strategy
is to sell the entire suite of products.  The expanded use of E911 will add
greater focus to the latter strategy.  In county sheriff departments,
JailServer NT is offered to round out a comprehensive information system.

        The Company customizes its software by state, so that each state's
prescribed reporting forms can be printed in accordance with such state's
requirements.  In addition, the Company's software allows users to customize
their reporting forms to their particular specifications.

        With the encouragement of the Company, active, independent user
groups, consisting of the police departments using PoliceServer and
PoliceServer NT and fire departments using FireServer and FireServer NT, have
developed.  Any department participating in the Company's annual support and
update service may attend its group's monthly meetings.  Currently there are
three police groups, one in each region, and one fire group, which is in the
Northeast.  Since each department uses identical software, the users are able
to effectively discuss the application and development of the system, to
support each other in identifying training techniques and new applications,
and to discuss concerns encountered in using the system.  The groups have also
served as a source of referrals of potential customers and as a source of
satisfied customers willing to recommend the Company's products to prospective
customers.  The Company relies on the groups to determine the direction and
development of updates or enhancements to be made to the software.

        The Company's strategy is to continue to expand its current
distribution approach by focusing in those states where the Company has
established reference sites within the region.  The strategy is structured so
as to permit the techniques and strategies developed in the New England area
to be extended to those states covered by dedicated sales teams.  The Company
depends on a Vice President of Sales and Marketing to lead these efforts.

        The Company believes that the initial sale of its products in a state
is critical to its marketing efforts and that subsequent sales within the same
state will be easier due to the already-achieved acceptance of its products
and the ability to use the first installation as a reference and for
demonstrations.  As of March 2001, the Company has customers in Connecticut,
Florida, Georgia, Indiana, Kentucky, Ohio, Massachusetts, Missouri, New
Hampshire, NewYork, Rhode Island, and Tennessee.

        The Company markets its products in the New England area as well as in
two additional regions of the country.  The Company has an office in DeBary,
Florida to support sales activities in the Southeastern states.  Marketing for
the Midwest is now being coordinated through the Company's headquarters in
Massachusetts.


Competition

        The public safety software business is highly competitive.  There are
a large number of small local and regional vendors across the country who
offer competing products on personal computers to agencies in the Company's
target markets.  There are also some medium sized companies that have a
national marketing presence.  The Company's management believes, that although
it will not be the only supplier, it will be one of a small group of vendors
providing an internally developed integrated NT based suite of public safety
products.

        The Company expects to encounter future competition from established
companies that are developing new products and from new companies that may
develop comparable products.

        The principal competitive factors that exist in the public safety
software business are price, ease of use, reputation relative to support and
design sophistication. Management believes the competitive advantages of the
Company's products include sophisticated capabilities and relative ease of use
within a fully integrated software suite, a complete native NT designed set of
products, and its consistent high level of customer satisfaction.


Principal Suppliers

        The Company also purchases personal computers, networking equipment
and peripherals and operating system software and databases from a number of
manufacturers and suppliers.  The Company acquires it mobile data software
from Aether Mobile Government.  Aether Mobile Government sells the products to
the Company at a discount and the Company resells them at the Aether Mobile
Government list price.  Products similar to the Aether products are available
from a number of other suppliers.


Customers

        The Company's target market consists of police and fire departments
serving populations under 250,000, campus police departments and other
non-municipal public safety agencies such as transit authority police, state
police and county sheriff departments.  The Company estimates that this target
market nationally is comprised of approximately 15,000 police departments and
5,000 fire departments.  Currently, however, the Company is marketing its
products to police and fire departments only in New England, the Midwest and
the Southeast, and the largest portion of its sales to date have been in New
England, particularly Massachusetts.  The Company has installed eight systems
in the lower Midwest Region, which is composed of the states of Indiana,
Kentucky Missouri and Ohio and has installed eighteen systems in the Southeast
Region, which is composed of Georgia, Tennessee, and Florida.

        In any given fiscal period, sales to any one purchaser of the
Company's products may account for 10% or more of the Company's revenues for
that fiscal period.  Because such sales usually involve a one-time purchase
for the customer, the existence of such purchase is not indicative of future
sales or the Company's dependence on any one customer.  During 2000 the sales
to one customer, the Utica Police Department, accounted for 14.6 % of annual
sales.



Licensing and Support

        The purchase price for the software system includes a perpetual
license to use the software.  The Company typically enters into a software
license agreement with its customers.

        Support and update service for the original VMS products is priced at
14% of the cost of the software package per year after the initial six-month
warranty period.  The support and update service for the NT products is priced
at 19% of list price at time of purchase after a six-month warranty period.
Current VMS customers who convert to the NT product will receive the NT
software at no charge but will be charged 19% of the current list price of the
NT product for support commencing on the date of conversion.  The migration of
customers from the existing product to the NT product is being done at no
software cost to the customer to protect the customer's investment in Pamet
Systems.  Pamet Systems will charge them for a migration service that includes
data conversion and training that will range from $7,500 to as high as
$80,000.  The payment of the annual support and update service fee
automatically extends the Company's warranty against software defects for an
additional year and entitles the licensee to receive all software upgrades and
enhancements and to participate in the appropriate user group.  In addition to
providing licensees with updates and enhancements, the Company's annual fee
also includes telephone support for all applications.  Currently all customers
subscribe to this service, primarily to receive software updates and
enhancements which average a minimum of one update per year.  Maintenance
charges on the hardware are not included in the Company's annual fee and are
currently billed and collected directly by hardware maintenance suppliers.

        The Company generally relies upon contract, trade secret and copyright
laws to protect its products.  The license agreement under which a customer
uses the Company's products restricts the customer's use to its own operations
and prohibits disclosure to third persons.  Notwithstanding these
restrictions, it may be possible for other persons to obtain copies of the
Company's products.  The Company believes that such copying would have limited
utility without access to the product's source code, which the Company keeps
highly confidential.  The Company's products are encoded to run only on
designated types and sizes of computers.  The Company incorporates certain
technological defenses into its products.  The Company believes that because
of the rapid pace of technological change in the computer industry, copyright
and patent protection is of less significance than factors such as the
knowledge and experience of the Company's personnel and their ability to
develop, enhance, market and acquire new products.

        The Company also requires all of its employees to execute agreements
requiring them to maintain the confidentiality of the Company's proprietary
information.


Research and Development

        The Company made significant research and development expenditures in
2000 in several areas totaling over $1,200,000 (including personnel costs).
The majority of the 2000 expenditure, as well as a significant portion of
1997, 1998 and 1999 research and development spending of over $3,000,000, was
focused on the NT product development of PoliceServer NT, CADServer NT and
FireServer NT.  Other expenditures included the purchase of Mapping software;
and development of the Investigator's Toolkit; and some further enhancements
of the Cerulean interface.  The Company used a combination of outside
resources and internal staff to design, develop and test these products
minimizing the long-term financial commitments of the Company.  NT product
development will continue into the first half of 2001 until all functionality
of the PoliceServer and FireServer have been completed on the NT platform.


Employees

        As of December 31, 2000, the Company had 19 full-time employees and 6
part-time employees, of whom 9 were engaged in computer programming, 8 were
engaged in documentation, training and software support and 8 were engaged in
sales, marketing and administration.  The Company has been using consultants
to complete a portion of its NT development to minimize the long-term impact
on the Company's operations.  The Company considers its employee relations to
be satisfactory.


Item 2. Properties

        The Company's operations are located in Acton, Massachusetts, where
the Company leases a 12,000 square foot office building.  This facility
contains office, training, conference, development, and shipping space.  The
original acquisition and renovation of the building had been financed from the
Company's working capital.  In April 1992 the Company mortgaged the facility
through a local lending institution with a $560,000 mortgage on the improved
facility. In August of 1999 the Company sold the building and entered into a
seven-year lease with the buyer.  The final sales price was $1,150,000.


Item 3. Legal Proceedings

        Not Applicable

Item 4. Submission of Matters to a Vote of Security Holders

        Not Applicable

<PAGE>

PART II

Item 5. Market for the Company's Common Equity and Related Stockholder
Matters.

        Shares of the Company's Common Stock are available for trading on the
NASDAQ Stock Market over-the-counter exchange.  The Common Stock is quoted
under the symbol PAMT.OB.

The following table sets forth the high and low bid prices of the Common Stock
as quoted on the OTC Bulletin Board.


<TABLE>
<CAPTION>
FISCAL YEAR ENDED
DECEMBER 31                              COMMON STOCK
                                         High    Low
<S>     <S>                             <S>     <S>
1999
        First Quarter                   $2.56   $1.50
        Second Quarter                   2.16    1.37
        Third Quarter                    4.25    2.06
        Fourth Quarter                   3.88    2.12

2000
        First Quarter                   $5.13   $3.50
        Second Quarter                   4.06    1.91
        Third Quarter                    2.69    1.94
        Fourth Quarter                   3.01    1.75
</TABLE>

        The Company had 86 registered shareholders of Common Stock on April
12, 2001.  The Company has not paid any dividends to date.  For the
foreseeable future, it is anticipated that earnings, if any, will be used to
finance the growth of the Company and that cash dividends will not be paid to
stockholders.

Sales of Securities

        On February 7, 2000, 40,000 shares of Pamet Systems Common Stock were
issued to an investor for an aggregate price of $90,000 or $2.25 per share
upon the exercise of warrants associated with an earlier securities purchase
agreement.  The issuance was exempt from registration requirements of the Act
pursuant to Section 4(2) thereof.

        On March 15, 2000, 40,000 shares of Pamet Systems Common Stock were
issued to an investor in exchange for the surrender of a $100,000 convertible
promissory note. The issuance was exempt from registration requirements of the
Act pursuant to Section 4(2) thereof.

        On March 20, 2000, 40,000 shares of Pamet Systems Common Stock were
issued to an investor in exchange for the surrender of a $100,000 convertible
promissory note. The issuance was exempt from registration requirements of the
Act pursuant to Section 4(2) thereof.

        On March 29, 2000, 20,000 shares of Pamet Systems Common Stock were
issued to an investor in exchange for the surrender of a $50,000 convertible
promissory note. The issuance was exempt from registration requirements of the
Act pursuant to Section 4(2) thereof.

        On March 29, 2000, the Company sold 50,000 shares of Pamet Systems
Common Stock at a price of $3.00 per share and warrants to purchase 50,000
shares of Common Stock at the exercise price of $3.50 for a total of $150,000
to one entity, which is an accredited investor as defined in Rule 501(a) under
the Securities Act of 1933, as amended (the "Act").  The issuance was exempt
from registration requirements of the Act pursuant to Section 4(2) thereof.

        On April 4, 2000, 172,413 and 100,000 shares of Pamet Systems Common
Stock respectively were issued to an investor in exchange for the surrender of
two $250,000 convertible promissory notes. The issuance was exempt from
registration requirements of the Act pursuant to Section 4(2) thereof.

        On April 5, 2000, 20,000 shares of Pamet Systems Common Stock were
issued to an investor in exchange for the surrender of a $50,000 convertible
promissory note. The issuance was exempt from registration requirements of the
Act pursuant to Section 4(2) thereof.

        On April 11, 2000, the Company sold 66,667 shares of Pamet Systems
Common Stock at a price of $3.00 per share and warrants to purchase 66,667
shares of Common Stock at the exercise price of $3.50 for a total of $200,000
to one entity, which is an accredited investor as defined in Rule 501(a) under
the Securities Act of 1933, as amended (the "Act").  The issuance was exempt
from registration requirements of the Act pursuant to Section 4(2) thereof.

        On August 31, 2000, the Company sold 100,000 shares of Pamet Systems
Common Stock at a price of $2.00 per share and warrants to purchase 100,000
shares of Common Stock at the exercise price of $2.50 for a total of $200,000
to one entity, which is an accredited investor as defined in Rule 501(a) under
the Securities Act of 1933, as amended (the "Act").  The issuance was exempt
from registration requirements of the Act pursuant to Section 4(2) thereof.

        On November 6, 2000, the Company sold 100,000 shares of Pamet Systems
Common Stock at a price of $2.00 per share and warrants to purchase 100,000
shares of Common Stock at the exercise price of $2.50 for a total of $200,000
to one entity, which is an accredited investor as defined in Rule 501(a) under
the Securities Act of 1933, as amended (the "Act").  The issuance was exempt
from registration requirements of the Act pursuant to Section 4(2) thereof.




Item 6.  Management's Discussion and Analysis of Financial Condition and
Results of Operations

Overview

Pamet Systems, Inc. (the "Company" or "Pamet Systems"), founded in 1987,
designs and implements broad-based information technology solutions for public
safety agencies enabling them to realize cost efficiencies and provide better
service to the public.  The foundation of the Company's fully integrated suite
of products is composed of three components: PoliceServer NT, FireServer NT,
and CADServer NT.  The Company also offers several companion products
including Imaging, Mobile Access, Advanced Reporting, JailServer NT,
Investigator's Tool Kit and Mapping that are integrated with the police and
fire records management and computer-aided dispatch modules.  Pamet Systems
total systems approach to public safety software allows the agency to enter
information once and have it available throughout the product suite.  The
Company's revenues consist primarily of sales of these software applications,
the associated hardware and systems integration, and support and update
service fees.

The Company's revenues for the 12 month period ended December 31, 2000 (the
2000 period) decreased 15.2% to $2,046,007 from $2,413,534 for the 12 month
period ended December 31, 1999 (the 1999 period).  With the release of the
Company's redesigned NT product line in the second half of the 1999 period,
the revenues began to shift back to sales of the core products: PoliceServer
NT, CADServer NT, and FireServer NT.  In addition, the Company's customer base
started to migrate from the older VMS-based products to the NT products.  The
Company's core products were completely rebuilt using modern design tools and
databases, and the entire suite utilizes the Windows NT 32 bit technology and
a GUI interface (graphical user interface).  In the year 2000, as in the past,
the Company experienced a slower first half due to the availability of
municipal funds.  In the Northeast where the Company does the largest amount
of its business, the municipal fiscal year begins on July 1 which is when
municipal funds become available.  However, in the 2000 period, the Company
did not experience the usual increase in sales during the third and fourth
quarters, but instead felt a slowdown in the demand.

Management believes that public safety agencies are deferring decisions to
replace aging technology infrastructure and application software until
economic conditions stabilize and clear leadership emerges in the industry.
Taking its cue from the advances in technology, Pamet Systems began rebuilding
its products on the NT platform late in 1997.  The Company spent over $1.2M
during the 2000 period and over $4.7M during the past four years on the
development of its NT-based suite of products.  This spending in the 2000
period includes $.4M on outside resources and $.8M of dedicated internal
personnel.  In addition, the Company also purchased the software product
rights for the Mapping product during the last quarter of the 1999 period
enhancing the Company's suite of products. Management believes that the
magnitude of the expense of developing new public safety software applications
using state of the art technologies will trigger a consolidation in the public
safety marketplace, which is dominated by small, privately held companies that
will have difficulty affording the development costs.  Pamet System's NT
product development effort during the past four years positions the Company to
be a leader in the marketplace.

The Company continues to believe that significant market opportunities exist
for its suite of NT-based products based on the following factors.  Major
federal grant programs continue to be announced that will allow agencies to
update their computer systems.  In early 2001, the federal government
announced COPSMore 2001, an $81M grant program earmarked solely for public
safety technology.  Pamet Systems held free grant seminars in the Northeast
and Midwest to aid agencies in understanding the grant application process and
assisted approximately 200 agencies in preparing their applications, which is
estimated to be about 10% of the applications the Justice Department will
receive.  Management also believes that it is possible that additional grant
programs will be announced as federal funding becomes available.  In addition,
the continuing growth in the number of E911 centers, heightened emphasis on
crime in most communities and the awareness by municipalities that computer
systems can improve the efficiency and effectiveness of their public safety
resources support the belief that the market for the Company's products will
continue to grow.  The Company has also seen increased emphasis on the
coordination of public safety systems between neighboring town, county, and
state police organizations.  The Company's products are designed and marketed
with the option to be used in this type of regional application.

The primary challenges that the Company is focusing on during the year 2001
are to capitalize on the design efforts that have resulted in a integrated
suite of NT-based products and to acquire adequate financing to fund immediate
needs and future growth.  The Company has launched a major financing program
with the goal of raising $10M to $15M.  The program is composed of a $1.5M
private placement to meet immediate cash needs with the remainder planned in a
secondary offering later in 2001 or in 2002.  There are no assurances that the
Company will be successful in its fundraising program, in light of, among
other things, the state of the financial markets and the Company's historical
financial performance.  During early 2001, the Company released major product
enhancements and extensions based, in part, on feedback from our NT customers.
These releases improve the product's ease of use and substantially extend its
capabilities.  As a result, the Company has received certification from three
states for our police records system's incident-based reporting (NIBRS)
capabilities and certification from the Massachusetts Fire Marshall for the
fire records system's advanced national reporting (NIFRS 5.0) capabilities.
The Company has also developed utilities to convert customer data files from
older systems, which will ease the transition for agencies.

Despite what the Company believes are numerous growth opportunities, the
Company remains hampered by under capitalization and the fact that its primary
market is the government sector, which is characterized by long lead times and
political influence in the decision making process.  As a consequence, the
Company is pursuing an analysis of complementary markets and adaptations for
its products.


Results of Operations

Year Ended December 31, 2000 vs. Year Ended December 31, 1999.

The Company's net sales decreased 15.2% or $367,527 to $2,046,007 for the 2000
period from $2,413,534 in the 1999 period.  As discussed above, total revenues
decreased during the 2000 period in what the Company believes is a reaction to
economic uncertainty and public safety marketplace turmoil.  The production
release of the NT based product early in the second half of the 1999 period
resulted in significant revenues for the Company during the third and fourth
quarters of the 1999.  In 2000, the Company experienced a significant slowdown
in sales of the Mobile product and decreased sales in the hardware portion of
system sales.  However, during the 2000 period, the Company was encouraged by
being awarded the contract to install the PoliceServer NT records management
system and CADServer NT dispatch system in the Utica, New York police
department.  This system is part of the Central New York Law Enforcement
Network Demonstration Project that is funded by the Department of Justice.
This project will serve as a model of current law enforcement technology for
mid-sized departments.  The National Law Enforcement Corrections Technology
Center (NLECTC) in Rome, NY manages the New York project and it is expected
that this project will serve as a model within NLECTC's thirteen-state
jurisdiction.  Final acceptance of the Utica system will take place during
April 2001 and NLECTC will generate a white paper for best practices in
implementing technology in small to mid-sized departments.  Several other
agencies in New York are awaiting the Utica acceptance and report.  The NT RMS
and CAD products have now been installed in twelve new agencies representing
ten communities and twenty-seven VMS sites are in the process of migrating to
the NT product.  In addition, revenues from the migration of VMS customer have
helped sustain sales.  Revenues from the Mobile products continue to suffer as
customers allocate available funding toward updating core systems to the NT
applications.

The Company has continued to see increased revenues from support and update
service fees resulting from increases in the installed base.  In addition,
nearly 100% of the Company's customers opt to renew their support contracts
annually.  Support revenues increased $119,474 or 16.7% to $832,969 for the
2000 period from $713,495 for the 1999 period.  These service revenues
represented 40.7 % of the Company's total revenues in the 2000 period versus
29.6% in the 1999 period.  The contribution of support will increase in the
future periods as new customers, as well as those existing customers that
migrate to the NT product, will be charged higher support fees. Current
customers who migrate to the NT product previously paid 14% of the original
VMS purchase price, but will now pay 19% of the current list price for the new
NT products at the time of conversion.

Cost of sales decreased $373,691 or 48.0% to $405,618 for the 2000 period from
$779,309 for the 1999 period reflecting reduced sales and the improved margins
on many of the Company's products.  The Company experienced an improvement in
gross margin from 67.7% in the 1999 period to 80.2% in the 2000 period.
Substantial increases in margin were generated by several product categories
including new systems and migration revenues.  The gains in the new systems
margin can be attributed to the trend of customers to provide their own system
hardware, which is less profitable than the software component of sales.
However, this practice has a negative impact on total revenues.  The migration
revenues are generated from installation, customer training, and data
conversion.  This process is facilitated by current engineering and support
personnel and generates no incremental costs to the Company. Software support
and update service revenues delivered traditionally high margins that remained
almost flat with the 1999 period at 84.3%

The Company's operating expenses decreased $494,912 or 11.8% to $3,707,965 for
the 2000 period from $4,202,877 for the 1999 period.  The Company's commitment
to bringing the NT product successfully to market in 1999 generated
significant increases in personnel costs and research and development
spending.  During the 2000 period, external research and development spending
decreased $787,300 or 65.0%.  This decrease was partially offset by an
increase of $156,975 in personnel costs related to the internal work on NT
development and hiring of a Marketing Vice President.  Total NT-related
personnel expenditures increased to $814,851 in the 2000 period from $659,255
in the 1999 period.  No development costs were capitalized during the 1999 or
2000 periods.  The capitalized development costs from 1998 of $195,665 are
being amortized over three years and the balance at the end of the year 2000
is $65,221.  Although the Company continued to use outside resources and
employees hired on short-term contracts in the design, development, and
testing of the NT products in 2000, management is also focusing on developing
internal engineering and support organizations that will maintain, upgrade and
support the NT product suite over the long term.

Personnel costs increased 7.8% or $156,975 to $2,175,040 for the 2000 period
from $2,018,065 for the 1999 period.  As the Company's development program
winds down, the Company has added engineering and support resources for
ongoing refinements, testing, documentation, and forms development for the NT
product line.  As the products are installed in additional states and further
product enhancements are released, it is essential that the documentation and
state-related forms are produced in a timely manner to ensure smooth customer
transitions.  During the 2000 period, the Company also hired a Vice President
of Marketing to strategically focus the sales and marketing efforts for the
new products.  He has been instrumental in developing the business plan and
new marketing collateral materials and in raising the awareness of Pamet
Systems in the public safety market through mailings and increased attendance
at trade shows.  These increases in personnel expense were partially offset by
reductions in commissions and employment agency fees.

Rent, utilities and telephone increased 52.8% or $76,550 to $221,521 for the
2000 period from $144,971for the 1999 period.  The most significant part of
the increase is due to a full year of rent expense on the Company's
headquarters building in 2000 compared to five months of expense in the prior
year after the sale and leaseback of the building in August 1999.  In
addition, telephone costs increased due to increased personnel and
installations and support outside Massachusetts.

Travel and entertainment expenses decreased $29,786 or 20.0% to $119,206 for
the 2000 period from $148,992 for the 1999 period.  These decreases affect all
areas of travel expense and reflect the Company's efforts to control expenses
in the face of declining sales.  In addition, a considerable number of the
shows, sales activity and customer installations have been in the Northeast
reducing airfares, hotels, and meals expense.

Spending on professional fees decreased $19,042 or 11.7% to $143,944 for the
2000 period from $162,986 for the 1999 period.  Legal fees decreased $28,303
or 28.9% due to reduced legal services required in support of the Company's
debt and equity fundraising activities and joint ventures.  Offsetting the
decrease in legal fees was an increase in accounting fees resulting from
expenses related to the 1999 audit and new requirements by the SEC for
publicly held small businesses.  The SEC now mandates quarterly reviews of the
Company's financial records and 10QSB prior to submission.

Depreciation and amortization expense decreased 14.4% or $20,929 to $124,040
for the 2000 period from $144,969 for the 1999 period reflecting the first
full year without depreciation on the headquarters building after its sale in
August 1999 and the reduction in depreciation on internal computer equipment
as it ages.

Other operating expenses increased 34.6% or $128,620 to $500,747 for the 2000
period from $372,127 for the 1999 period.  Significant increases in spending
on marketing collateral materials, trade shows and tax penalties, as well as
an increase in the provision for uncollectible accounts, were offset by a
decrease in spending on Internet access.

Net interest expense decreased to $99,459 for the 2000 period compared to the
net interest expense of $267,818 for the 1999 period.  This decrease reflects
the reversal of accrued interest costs on the convertible promissory notes
issued to outside investors as part of the Company's capital raising program
when these notes were converted to equity during 2000.  The amount of
convertible promissory notes outstanding at the end of the 2000 period was
$835,000 compared to $1,635,000 at the end of the 1999 period.  The interest
on these notes is not payable if the investors convert their notes to equity.

The loss for the 2000 period was $(2,167.035) or $(.57) per share compared to
a loss of $(2,836,470) or $(1.00) per share for the 1999 period.  The
reduction in loss per share can be partially attributed to the reduced loss in
2000, as well as to the increase in total shares outstanding to 4,085,610 at
the end of the 2000 period compared to 3,285,238 at the end of the 1999
period.



Liquidity and Capital Resources

The Company had working capital deficit of $(2,817,468) at December 31, 2000
compared to $(1,501,900) at December 31, 1999.  The most significant reasons
for this deterioration are the impact on receivables from lower sales in the
fourth quarter of 2000, the increased use of related party notes, the increase
in deferred revenues due to the Utica project, and the increase in accounts
payable and accrued expenses.

During the 2000 period, the Company secured $750,000 of additional equity
financing and received $90,000 from an investor who exercised the warrants
issued with his convertible note.  In addition, five investors converted
$800,000 of long-term convertible promissory notes to equity.  During the
first half of 2000, loan commitments from directors were increased to $425,000
from $300,000 and the Company had $385,000 outstanding on director's loans at
year-end.  At December 31, 2000, $835,000 of convertible promissory notes and
$143,538 of related interest remained outstanding as liabilities.  In general,
the outstanding convertible debt funding accrues interest at 11%; has a two
year term; carries the option of conversion of the principal to common stock
by the debt holder at conversion prices ranging from $2.19 to $2.50 per share,
or repayment of principal and accrued interest by the Company; and has 100%
warrant coverage attached that allows for the purchase of additional shares of
common stock at exercise prices ranging from $2.19 to $2.50 per share.  The
Company's ability to repay the outstanding convertible promissory notes with
accrued interest on due dates is at risk, especially the $425,000 due in the
current year.  Subsequent to the year-end, the Company received an additional
$100,625 in equity funding, issued $350,000 in long-term convertible
promissory notes, and used an additional $90,000 of loans from directors.

Cash decreased to $1,507 at December 31, 2000 from $40,207 at December 31,
1999.  Accounts receivable decreased to $238,961 at December 31, 2000 from
$672,997 at December 31, 1999 due to the decrease in sales during the fourth
quarter of 2000 as compared to the same period in 1999.  The resources
necessary to fund the enhancements and extensions to the NT product and
provide working capital for operations continue to be a major concern for the
Company.  In the fourth quarter of 2000, the Company launched a $1.5M private
placement financing program to meet immediate cash needs. To date, the Company
has received over $450,000 of additional funding from the program.  Late in
2000, the Company felt the effects of a slowdown in the general economic
conditions and within the public safety marketplace.  However, with the newly
announced federal grant program COPSMore 2001 and the strong sales pipeline
resulting from the addition of sales and marketing resources, the Company is
optimistic about revenues in the second half of 2001.  If additional funds are
required, the Board of Directors is willing to seek additional financing.  As
discussed earlier, the Company launched a major fundraising program to raise
an additional $10M to $15M and has received over $450,000 to date.
Nevertheless, the Company continues to be hampered by insufficient cash
resources.  As noted in the Auditor's Report, there can be no assurances that
the Company will be able to generate adequate cash either through operations
or additional financing to continue as a going concern.  Failure to acquire
the necessary financing could have a material adverse effect on the Company.
Backlog at March 29, 2001 was approximately $708,000.  The Company is
continuing to consider projects to increase its cash position such as
activities to raise capital, mergers, acquisitions or other business
combinations.

As of December 31, 2000, the Company had accumulated $10,981,000 of federal
net operating loss carryforwards that expire beginning in the year 2005.  In
addition, the Company has state net operating losses to carryforward of
$7,266,000 which expire between the years 2002 and 2005.  Under the Internal
Revenue Code of 1986, as amended, the rate at which a corporation may utilize
its net operating losses to offset income for federal tax purposes is subject
to specified limitations during periods after the corporation has undergone an
"ownership change".  It has been determined that an ownership change did take
place at the time of the Company's initial public offering.  However, the
limitations on the loss carryforward exceed the accumulated loss at the time
of the "ownership change".  Thus there is no restriction on its use.

Seasonality

The majority of the Company's installed base has a fiscal year that commences
on July 1 and, therefore, the Company bills its customers for their annual
software support and update service on July 1 of each year.  Consequently,
cash flow representing software support revenues has tended to be higher in
the second half of the Company's fiscal year, although software support
revenues are recognized ratably throughout the fiscal year.

Revenue Recognition

Revenues from software license fees are recognized when a contract has been
executed, the product has been delivered, all significant contractual
obligations have been satisfied and collection of the related receivable is
probable.  Maintenance revenues, including those bundled with the initial
license fee, are deferred and recognized ratably over the service period.
Consulting and training service revenues are recognized as the services are
performed.

Inflation

Inflation has not had a significant impact on the Company's operations to
date.

<PAGE>

Item 7.  Financial Statements and Supplementary Data.
         --------------------------------------------



                     PAMET SYSTEMS, INC.

               INDEX TO FINANCIAL STATEMENTS

                                                       Page

Report of Independent Auditors  .....................   F-2

Financial Statements:

        Balance Sheet - December 31, 2000 ...........   F-3

        Statements of Operations -
          Years Ended December 31, 2000 and 1999....... F-4

        Statements of Stockholders' Deficit -
          Years Ended December 31, 2000 and 1999        F-5

        Statements of Cash Flows -
          Years Ended December 31, 2000 and 1999  ....  F-6

Notes to Financial Statements   ....................... F-8


All schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission are not required under
the related instructions or are inapplicable, and therefore have been omitted.


<PAGE>



                  REPORT OF INDEPENDENT AUDITORS


Board of Directors and Stockholders
Pamet Systems, Inc.


We have audited the accompanying balance sheet of Pamet Systems, Inc. as of
December 31, 2000, and the related statements of operations, stockholders'
deficit and cash flows for each of the two years in the period ended December
31, 2000. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Pamet Systems, Inc. as of
December 31, 2000, and the results of its operations and its cash flows for
each of the two years in the period ended December 31, 2000, in conformity
with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As disclosed in the financial
statements, the Company has an accumulated deficit at December 31, 2000 and
has suffered substantial net losses in each of the last two years, which raise
substantial doubt about the Company's ability to continue as a going concern.
Management's plans in regard to these matters are disclosed in Note A. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.

CARLIN, CHARRON & ROSEN LLP
Worcester, Massachusetts


March 29, 2001


<PAGE>

<TABLE>
<CAPTION>
BALANCE SHEET
PAMET SYSTEMS, INC.
                                                   December 31,
                                                           2000
                                                   ------------
<S>                                                 <S>
ASSETS
------
CURRENT ASSETS
        Cash                                           $  1,507
        Accounts receivable, trade, net of
           allowance for doubtful accounts of
           $175,000 and factored receivables of
           $88,502                                      224,191
        Accounts receivable, factored                    14,770
        Inventory, net of reserve of $15,000             10,151
        Prepaid expenses and other current assets       147,132
                                                        -------
                TOTAL CURRENT ASSETS                    397,751

PROPERTY AND EQUIPMENT, NET                              98,312
DEPOSITS                                                 84,190
CAPITALIZED SOFTWARE DEVELOPMENT COSTS, NET              65,221
                                                        -------
                        TOTAL ASSETS                   $645,474
                                                        =======
LIABILITIES AND STOCKHOLDERS' DEFICIT
-------------------------------------
CURRENT LIABILITIES
        Current portion of long-term debt              $425,000
        Notes payable to related parties                385,000
        Due to factor                                    36,199
        Accounts payable, trade                         795,226
        Accounts payable, related parties                19,945
        Current portion of accrued interest
           payable on long-term debt                    143,538
        Current portion of deferred gain on
           sale of land and building                     42,614
        Accrued expenses                                766,192
        Deferred software maintenance revenue
           and unearned revenue                         601,505
                                                      ---------
                TOTAL CURRENT LIABILITIES             3,215,219

DEFERRED GAIN on sale of land and building, net
   of current portion                                   195,888
LONG TERM DEBT, net of current portion                  410,000
                                                      ---------
                TOTAL LIABILITIES                     3,821,107

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' DEFICIT
        Preferred stock, $.01 par value, 1,000,000
           shares authorized, none issued                    --
        Common stock, $.01 par value, 30,000,000
           shares authorized, 4,085,610 shares
           issued and outstanding                        40,856
        Additional paid-in capital                    8,358,593
        Accumulated deficit                         (11,575,082)
                                                     ----------
                 TOTAL STOCKHOLDERS' DEFICIT         (3,175,633)
                                                      ---------
      TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT   $   645,474
                                                      =========

</TABLE>

See independent auditor's report and accompanying notes to financial
statements

<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS
PAMET SYSTEMS, INC.

                                         Year Ended  December 31,
                                         ------------------------
                                               2000          1999
                                               ----          ----
<S>                                     <S>           <S>
Net hardware and software sales          $1,213,038    $1,700,039
Support revenues                            832,969       713,495
                                          ---------     ---------
                TOTAL REVENUES            2,046,007     2,413,534

Cost of sales                               405,618       779,309
                                          ---------     ---------
                GROSS PROFIT              1,640,389     1,634,225
                                          ---------     ---------

Operating expenses
        Personnel costs                   2,175,040     2,018,065
        Rent, utilities and telephone       221,521       144,971
        Travel and entertainment            119,206       148,992
        Professional fees                   143,944       162,986
        Depreciation and amortization       124,040       144,969
        Research and development            423,467     1,210,767
        Other operating expenses            500,747       372,127
                                          ---------     ---------
                TOTAL OPERATING EXPENSES  3,707,965     4,202,877
                                          ---------     ---------
Loss from operations                     (2,067,576)   (2,568,652)
Interest expense, net                       (99,459)     (267,818)
                                          ---------     ---------

                NET LOSS                $(2,167,035)  $(2,836,470)

                                          =========     =========

Loss per common share                         $(.57)       $(1.00)
                                                ===          ====

</TABLE>

See independent auditor's report and accompanying notes to financial
statements

<TABLE>
<CAPTION>
STATEMENTS OF STOCKHOLDERS' DEFICIT
PAMET SYSTEMS, INC.

                        Common Stock  Additional                        Total
                        ------------     Paid-In    Accumulated Stockholders'
                       Shares  Amount    Capital        Deficit       Deficit
                       ------  ------    -------        -------       -------
<S>                 <S>       <S>     <S>           <S>           <S>
BALANCE AT
JANUARY 1, 1999
                    2,545,500 $25,455 $5,306,924     $(6,571,577) $(1,239,198)

NET LOSS                                              (2,836,470)  (2,836,470)

CONVERSION OF
STOCK OPTIONS          11,750     117      8,860              --        8,977

CONVERSION OF
PROMISSORY NOTES
TO STOCK              315,988   3,160    596,840              --      600,000

CONVERSION OF
WARRANTS TO STOCK      87,000     870    129,130              --      130,000

PRIVATE PLACE-
MENT OF STOCK         325,000   3,250    646,750              --      650,000
                    ---------  ------  ---------       ---------    ---------
BALANCE AT
DECEMBER 31, 1999   3,285,238  32,852  6,688,504      (9,408,047)  (2,686,691)

NET LOSS                                              (2,167,035)  (2,167,035)

CONVERSION OF
STOCK OPTIONS          38,875     389     37,704              --       38,093

CONVERSION OF
PROMISSORY NOTES
TO STOCK              392,414   3,924    796,076              --      800,000

CONVERSION OF
WARRANTS TO STOCK      52,416     524     89,476              --       90,000

PRIVATE PLACE-
MENT OF STOCK         316,667   3,167    746,833              --      750,000
                    --------- -------  ---------      ----------    ---------
BALANCE AT
DECEMBER 31, 2000   4,085,610 $40,856 $8,358,593    $(11,575,082) $(3,175,633)
                    ========= =======  =========      ==========    =========

</TABLE>

See independent auditor's report and accompanying notes to financial
statements

<TABLE>
<CAPTION>
STATEMENTS OF CASH FLOWS
PAMET SYSTEMS, INC.
                                                     Year Ended December 31,
                                                     -----------------------
                                                           2000         1999
                                                           ----         ----
<S>                                                <S>           <S>
OPERATING ACTIVITIES

        Net loss                                    $(2,167,035) $(2,836,470)
        Adjustments to reconcile net loss to
           net cash used for operating activities:
           Deferred gain on sale of land and
               building                                 (42,614)     (17,184)
           Depreciation and amortization                124,040      144,969
           Provision for losses on accounts
               receivable, trade                         65,000       49,566
           Long-term debt incurred for research
               and development                               --       75,000
           Line of credit and accounts payable,
               trade-vendor incurred for research
               and development subsequently
               converted to long-term debt                   --      180,066

        Changes in operating assets and
               liabilities:
           Accounts receivable, trade                   329,875     (250,403)
           Accounts receivable, factored                 39,161       65,245
           Inventory                                      1,594       38,509
           Prepaid expenses and other current
               assets                                   (52,889)     (12,822)
           Restricted cash                                   --       28,534
           Deposits                                          --      (80,000)
           Due to factor                                (21,297)      (8,484)
           Accounts payable, trade                      106,934      (99,472)
           Accounts payable, related parties            (12,296)      11,728
           Accrued expenses                             329,567      186,472
           Accrued interest payable on long-term
               debt                                       2,133      126,291
           Deferred software maintenance revenue
               and unearned revenue                     217,575       84,459
                                                      ---------    ---------

           Net cash used for operating activities    (1,080,252)  (2,313,996)
                                                      ---------    ---------
INVESTING ACTIVITIES

        Expenditures for property and equipment         (46,541)     (33,914)
        Proceeds from sale of land and building              --    1,089,066
                                                         ------    ---------
           Net cash provided by/(used for)
              investing activities                      (46,541)   1,055,152
                                                         ------    ---------

</TABLE>

                                (continued)

<TABLE>
<CAPTION>
STATEMENTS OF CASH FLOWS - CONTINUED
PAMET SYSTEMS, INC.                                  Year Ended December 3l,
                                                           2000         1999
                                                           ----         ----
<S>                                                <S>           <S>
FINANCING ACTIVITIES

        Proceeds from long-term debt-convertible
            promissory notes           $                     --     $760,000
        Proceeds from related party notes               210,000      250,000
        Payment of related party notes                       --      (25,000)
        Payments on mortgage note                            --     (479,743)
        Issuance of common stock                        878,093      738,977
                                                      ---------    ---------
           Net cash provided by financing
               activities                             1,088,093    1,244,234
                                                      ---------    ---------

               NET DECREASE IN CASH                     (38,700)     (14,610)
  Cash at beginning of period                            40,207       54,817
                                                         ------       ------
               CASH AT END OF PERIOD                   $  1,507      $40,207
                                                          =====       ======

        SUPPLEMENTAL DISCLOSURES OF CASH
               FLOWS INFORMATION

               Cash paid for interest                   $78,639     $123,000
                                                         ======      =======

        SUMMARY OF NON-CASH FINANCING ACTIVITIES

               Research and development costs
                 financed through line of credit
                 and accounts payable, trade-vendor    $     --     $180,066
                                                         ======      =======
               Note payable-related party and
                 accrued interest repaid by
                 issuance of common stock              $     --      $50,000
                                                         ======        =====
               Conversion of long-term
                 debt-convertible promissory notes
                 to common stock                       $800,000     $600,000
                                                        =======      =======
               Line of credit and accounts payable,
                 trade-vendor converted to
                 long-term debt-convertible
                 promissory note                       $     --     $350,000
                                                        =======      =======
               Deferred gain as a result of sale
                 and leaseback transaction             $     --     $298,299
                                                        =======      =======
               Research and development costs
                  financed by long-term debt-
                  convertible promissory note          $     --      $75,000
                                                        =======       ======

</TABLE>


See independent auditor's report and accompanying notes to financial
statements

<PAGE>

NOTES TO FINANCIAL STATEMENTS
PAMET SYSTEMS, INC.

NOTE A--NATURE OF OPERATIONS

Pamet Systems, Inc. (the Company), a Massachusetts corporation, was formed in
November 1987 to engage in the business of designing, developing, installing
and servicing computer software systems for the municipal market throughout
the United States, principally in the area of public safety. Credit is granted
to certain customers, most of which are municipalities. The Company generally
does not require collateral.

The Company's backlog at March 29, 2001 was approximately $708,000
(unaudited). Management believes that this level of backlog and its
anticipated sales, as well as the funding described below, are adequate to
sustain operations through the end of fiscal year 2001.

However, the ultimate success of the Company is still dependent upon its
ability to secure financing adequate to meet its working capital and ongoing
product development needs. In addition, in order for the Company's operations
to be maintained and/or expanded, the Company will need to successfully market
its Microsoft Windows NT computing platform applications. Subsequent to
year-end, the Company had a private placement in which an investor purchased
80,500 shares of the Company's common stock at a price of $1.25 per share.  In
addition, the Company received $350,000 through the issuance of long-term
convertible promissory notes to two investors with an interest rate of 11%.
The Company also received an additional $90,000 through borrowings from two
directors with an 11% interest rate. If additional funds are required beyond
the related party credit facility that is available as discussed in Note C,
the current Board members are willing to seek additional equity financing, as
needed. Management believes the Company's current sources of liquidity and
funding are adequate to sustain operations. Management is also seeking to
enhance the Company's financial position by obtaining additional permanent
financing. There can be no assurance, however, that the Company's operations
will be sustained or be profitable in the future, that adequate sources of
financing will be available at all, when needed or on commercially acceptable
terms, or that the Company's product development and marketing efforts will be
successful.

NOTE B--SIGNIFICANT ACCOUNTING POLICIES

Property and equipment:  Property and equipment are stated at cost and are
depreciated on the straight line or accelerated methods over their estimated
useful lives.

Inventory:  Inventory consists primarily of computer-related supplies and is
stated at the lower of cost (first-in, first-out) or market value.

Long-lived assets:  The Company records impairment losses on long-lived assets
used in operations, including intangible assets, when events and circumstances
indicate that the assets might be impaired and the undiscounted cash flows
estimated to be generated by those assets are less than the carrying amounts
of those assets.


<PAGE>

NOTES TO FINANCIAL STATEMENTS--CONTINUED
PAMET SYSTEMS, INC.

NOTE B--SIGNIFICANT ACCOUNTING POLICIES (continued)

Accounts receivable, factored:  The Company factors part of its accounts
receivable with recourse, which means that the Company bears the risk of
uncollectible accounts over 120 days old. Accounts receivable, factored in the
accompanying balance sheet represents the portion of each account held back by
the factor. The balance will be remitted to the Company when the respective
accounts have been collected.

Due to factor:  The balance represents the Company's estimated liability for
its factored accounts that will become greater than 120 days old or
uncollectible, based on historical collections.

Deferred software maintenance revenue and unearned revenue:  Deferred software
maintenance revenue and unearned support revenue represent revenue relating to
software support, updates and warranties which the Company has not yet earned.
Software maintenance fees are recognized ratably over the period of the
service contract. The portion of the maintenance fee associated with the sale
of a first time system or software that relates to the initial maintenance
period is also recognized ratably over the period of the extended service.

Deferred gain on sale of land and building:  The balance represents a deferred
gain on the sale of real estate, accounted for as a sale-leaseback
transaction. The gain is being amortized and shows as a reduction of rent
expense over the term of the lease on a straight-line basis.

Revenue recognition:  The Company generally recognizes product revenue upon
shipment. Revenues for products with extensive installation requirements under
contractual agreements are recognized upon customer acceptance.

Loss per common share:  In 2000 and 1999, loss per common share is computed
using the weighted average number of shares of common stock outstanding during
the period. Diluted per share computations are not presented since the effect
would be antidilutive.

Stock-based compensation:  The Company measures compensation expense relative
to employee stock-based compensation plans using the intrinsic value-based
method of accounting as prescribed by Accounting Principles Board Opinion No.
25, "Accounting for Stock Issued to Employees". However, the Company will
disclose the pro forma amounts of net income and earnings per share as though
the fair value-based method of accounting prescribed by Statement of Financial
Accounting Standards No. 123, "Accounting for Stock-Based Compensation", had
been applied.  See the Stockholders' Equity Note for these disclosures.

<PAGE>

NOTES TO FINANCIAL STATEMENTS-CONTINUED
PAMET SYSTEMS, INC.

NOTE B-SIGNIFICANT ACCOUNTING POLICIES (continued)

Capitalized software development costs:  Pursuant to Statement of Financial
Accounting Standards No. 86, "Accounting for the Costs of Computer Software to
be Sold, Leased or Otherwise Marketed," the Company capitalizes certain
software development costs once technological feasibility of the related
products, as defined in the statement, has been achieved. The establishment of
technological feasibility and the ongoing assessment of recoverability of
capitalized software development costs require considerable judgment by
management with respect to certain external factors, including anticipated
future gross revenues, estimated economic life and changes in software and
hardware technology. Software development costs incurred prior to achieving
technological feasibility as well as certain licensing and other research and
development costs are charged to research and development expense as incurred.

Capitalized software development costs are reported at the lower of
unamortized cost or net realizable value. Net realizable value is determined
by periodically reviewing net capitalized software development costs for
impairment based upon current and anticipated product revenue and other
changes in circumstances that indicate the carrying amount of the capitalized
software development costs may not be fully recoverable. Commencing with the
initial product release, these costs are amortized on the straight-line method
over the estimated life of the product, generally three to five years. The
Company began amortizing software costs on product that was available for sale
in the first quarter of 1999. Accumulated amortization of capitalized software
costs at December 31, 2000 was $130,443.

Use of estimates:  The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

Income taxes:  The Company accounts for income taxes according to the
liability method. Under this method, deferred tax assets and liabilities are
determined based on differences between financial reporting and income tax
bases of assets and liabilities and are measured using enacted tax rates and
tax laws that will be in effect when the differences are expected to reverse.
The primary component of the Company's deferred tax asset as of December 31,
2000, which is fully reserved, is net operating loss carryforwards.

NOTE C--RELATED-PARTY TRANSACTIONS

Compensation:  The Company expensed approximately $22,000 in 2000 and $24,000
in 1999 relating to a stockholder and director for financial accounting
consulting services. In addition, the Company expensed approximately $157,000
in 2000 and $360,000 in 1999 relating to a Company in which an employee is a
principal, for research and development expenses.

<PAGE>

NOTES TO FINANCIAL STATEMENTS-CONTINUED
PAMET SYSTEMS, INC.

NOTE C-RELATED-PARTY TRANSACTIONS (continued)

Notes payable to related parties represent promissory notes which provide a
credit facility up to $425,000 to the Company from two officers and two
directors. Interest is applied at 11% per annum. Warrants are awarded to the
lenders for the amount of the note available to be utilized for each fifteen
month period at a rate of 1,250 warrants per $10,000 available, at the fair
market value of the Company's shares on that date. The maturity date of the
promissory notes is June 1, 200l.

Accounts payable, related parties represent non-interest bearing amounts owed
to employees and directors for services performed or expense reimbursements.

In addition, during 1999 two stockholders and directors of the Company
converted $600,000 of promissory notes to common stock.

NOTE D--PROPERTY AND EQUIPMENT AND ACCUMULATED DEPRECIATION

<TABLE>
<CAPTION>
Property and equipment at December 31, 2000 is as follows:

                              Balance at                         Balance at
                               Beginning   Additions                 End of
Classification                 of Period     at Cost Retirements     Period
--------------                 ---------   --------- ----------- ----------
<S>                             <S>          <S>       <S>         <S>
     Furniture and fixtures     $133,327     $ 7,856   $      --   $141,183
     Computer equipment          482,527      38,685          --    521,212
     Automobiles                  24,894          --          --     24,894
                                 -------      ------      ------    -------
             TOTALS             $640,748      46,541          --   $687,289
                                 =======      ======      =======   =======
</TABLE>
<TABLE>
<CAPTION>
Accumulated depreciation at December 31, 2000 is as follows:

                              Balance at   Additions             Balance at
                               Beginning     Charged                 End of
Classification                 of Period  to Expense Retirements     Period
--------------                 ---------  ---------- ----------- ----------
<S>                             <S>          <S>        <S>        <S>
     Furniture and fixtures     $127,390     $ 4,118    $     --   $131,508
     Computer equipment          383,217      52,182          --    435,399
     Automobiles                  19,551       2,519          --     22,070
                                 -------      ------     -------    -------
             TOTALS             $530,158     $58,819    $     --   $588,977
                                 =======      ======     =======    =======

</TABLE>

<PAGE>

NOTES TO FINANCIAL STATEMENTS-CONTINUED
PAMET SYSTEMS, INC.

NOTE E--ACCRUED EXPENSES

<TABLE>
<CAPTION>
Accrued expenses consist of the following at December 31, 2000:

<S>                                                    <S>
Accrued payroll, bonuses and vacation                  $459,981
Accrued and withheld payroll taxes                      210,600
Other                                                    95,611
                                                        -------
                                                       $766,192
</TABLE>
                                                        =======
<TABLE>
<CAPTION>
NOTE F--LONG-TERM DEBT

<S>                                                                 <S>
Long-term debt represents convertible promissory notes with five
year detachable warrants. The promissory notes may be converted
to common stock no more frequently than four times per year at an
amount of not less than $25,000. No interest shall be deemed to
have accrued or be payable on any portion of a note converted prior
to maturity. The conversion price, maturity dates and the warrants
available on each note are as follows:

Convertible promissory note with five year detachable warrants
which allow the noteholder to purchase up to 14,000 shares of
common stock at $2.50 per share. No warrants have been exercised
at December 31, 2000. The principal amount of the note may be
converted to common stock at $2.50 per share, at the noteholder's
option as described above. No principal has been converted to
common stock at December 31, 2000. The interest rate on the note
is 11% per year and interest expense in fiscal year 2000 was
$3,850. Total interest accrued on the note at December 31, 2000
was $6,339. Both the principal balance of the note and unpaid
accrued interest were due on May 9, 2001. Subsequent to year-end,
this note was extended to May 9, 2002 and thus is shown as
long-term in these financial statements.                              $35,000

Convertible promissory note with five year detachable warrants
which allow the noteholder to purchase up to 150,000 shares of
common stock at $2.50 per share. No warrants have been exercised
at December 31, 2000. The principal amount of the note may be
converted to common stock at $2.50 per share, at the noteholder's
option as described above. No principal has been converted to
common stock at December 31, 2000. The interest rate on the note
is 11% per year and interest expense in fiscal year 2000 was
$41,250. Total interest accrued on the note at December 31, 2000
was $67,469. Both the principal balance of the note and unpaid
accrued interest were due on May 13, 2001. Subsequent to year-end,
this note was extended to May 13, 2002 and thus is
shown as long-term in these financial statements.                     375,000

</TABLE>

<PAGE>

<TABLE>
<CAPTION>
NOTES TO FINANCIAL STATEMENTS-CONTINUED
PAMET SYSTEMS, INC.

NOTE F--LONG-TERM DEBT (continued)

<S>                                                                 <S>
Convertible promissory note to a vendor with five year detachable
warrants which allow the noteholder to purchase up to 140,000
shares of common stock at $2.50 per share. No warrants have been
exercised at December 31, 2000. The principal amount of the note
may be converted to common stock at $2.50 per share, at the
noteholder's option as described above. No principal has been
converted to common stock at December 31, 2000. The interest rate
on the note is 11% per year and interest expense in fiscal year
2000 was $38,500. Total interest accrued on the note at
December 31, 2000 was $61,073. Both the principal balance of the
note and unpaid accrued interest are due on May 31, 2001.           $350,000

Convertible promissory note to a vendor with five year detachable
warrants which allow the noteholder to purchase up to 7,500 shares
of common stock at $2.19 per share. No warrants have been exercised
at December 31, 2000. The principal amount of the note may be
converted to common stock at $2.19 per share, at the noteholder's
option as described above. No principal has been converted to
common stock at December 31, 2000. The interest rate on the note is
11% per year and interest expense in fiscal year 2000 was $8,250.
Total interest accrued on the note at December 31, 2000 was $8,657
and unlike the notes above is to be paid quarterly. However,
at December 31, 2000 no interest has been paid on this note and
thus the Company is in default of the original note agreement.
Both the principal balance of the note and unpaid accrued
interest are due on December 13, 2001.                                75,000
                                                                     -------
                                                                     835,000
                      Less current portion of long-term debt         425,000
                                                                     -------
                                                                    $410,000
                                                                     =======
</TABLE>

<TABLE>
<CAPTION>
The notes are shown at face value because the value attributed to
the detachable warrants was considered not material.
<S>                                                                 <S>
Annual principal maturities of long-term debt are as follows:
        Year ending     December 31, 2001                           $425,000
                        December 31, 2002                            410,000
                                                                     -------
                                                                    $835,000
                                                                     =======
</TABLE>

<PAGE>

NOTES TO FINANCIAL STATEMENTS-CONTINUED
PAMET SYSTEMS, INC.

NOTE G--STOCKHOLDERS' EQUITY

Stock-based compensation expense under the fair value-based method of
accounting would have resulted in pro forma net loss and loss per common share
approximating the following amounts:

<TABLE>
<CAPTION>
                                    2000                      1999
                         ------------------------  ------------------------
                         As Reported    Pro Forma  As Reported    Pro Forma
                         -----------    ---------  -----------    ---------
<S>                      <S>          <S>          <S>          <S>
Net loss                 $(2,167,035) $(2,703,671) $(2,836,470) $(3,199,775)
                           =========    =========    =========    =========

Loss per common share         $(0.57)      $(0.72)      $(1.00)      $(1.13)
                                ====         ====         ====         ====
</TABLE>

The fair value of each option granted during 2000 and 1999, reflecting the
basis for the above pro forma disclosures, was determined on the date of grant
using the Black-Scholes option-pricing model. The following assumptions were
used in determining fair value through the model:

<TABLE>
<CAPTION>
                                2000                     1999
                                ----                     ----
<S>                      <S>                      <S>
Expected Life              5-8 years*               5-8 years*
Risk-free interest rate  5.92%-6.76%*             4.51%-6.00%*
Expected Volatility             110%                     116%

</TABLE>
*Amounts vary due to graded vesting for options granted to employees and
differences between options granted to employees and options granted to
directors.

The Company recognizes forfeitures as they occur.

The application of fair value-based accounting in arriving at the pro forma
disclosures above is not an indication of future income statement effects.
The pro forma disclosures do not reflect the effect of fair-value accounting
on stock-based compensation awards granted prior to 1995, if any.

Stock Option Plans:  In 1990, the Company adopted a Stock Option Plan under
which the Board of Directors may grant incentive or non-qualified stock
options to employees, directors and consultants of the Company. The maximum
number of shares of stock subject to issuance under the 1990 Stock Option Plan
is 400,000 shares. These options, of which a total of 148,500 had been
exercised at December 31, 2000, are exercisable within a ten-year period from
the date of the grant, and are generally fully exercisable when issued to
directors and exercisable 20% per year and continuing over five years for
employees (based on continual employment) and consultants. The options are not
transferrable except by will or domestic relations order. The option price per
share under the Plan is not less than the fair market value of the shares on
the date of grant.


                                 (continued)

<PAGE>

NOTES TO FINANCIAL STATEMENTS-CONTINUED
PAMET SYSTEMS, INC.

<TABLE>
<CAPTION>
NOTE G--STOCKHOLDERS' EQUITY (continued)

Stock option activity for the 1990 Stock Option Plan for the two year period
ended December 31, 2000 is as follows:
<S>                 <S>        <S>             <S>      <S>        <S>
                                                    Weighted Average
                                               ----------------------------
                        Number Exercise Price  Exercise Fair Value  Remain-
                    Of Options      Per Share     Price   at Grant ing Life
                    ---------- --------------  -------- ---------- --------
Outstanding
January 1, 1999        267,750     $.02-$5.50     $1.20                2.55
                                                                      years
Granted                 13,800          $2.50     $2.50      $2.07
Cancelled                 (800)          $.02      $.02
Exercised               (7,500)          $.02      $.02
                       -------       --------
Outstanding
December 31, 1999      273,250     $.02-$5.50     $1.30                1.78
                                                                      years
Cancelled               (6,000)         $3.50     $3.50
Exercised              (21,750)    $.02-$1.44      $.35
                       -------      ---------
Outstanding
December 31, 2000      245,500     $.02-$5.50     $1.34                0.93
                                                                      years
                       =======      =========
Exercisable at
December 31, 2000      236,800     $.02-$5.50     $1.26
                       =======       ========
Exercisable at
December 31, 1999      243,250     $.02-$5.50     $1.15
                       =======       ========
Available for Grant
At December 31, 2000    6,000
                        =====
Available for Grant
At December 31, 1999       --
                        =====

</TABLE>

In 1998, the Company adopted a Stock Option Plan under which the Board of
Directors may grant incentive or non-qualified stock options to employees,
directors and consultants of the Company. The maximum number of shares of
stock subject to issuance under the 1998 Stock Option Plan is 250,000 shares.
These options, of which a total of 17,375 had been exercised at December 31,
2000, are exercisable within a ten-year period from the date of the grant, and
are generally fully exercisable when issued to directors and exercisable 25%
per year and continuing over four years for employees (based on continual
employment) and consultants. The options are not transferable except by will
or domestic relations order. The option price per share under the Plan is not
less than the fair market value of the shares on the date of grant.

                                 (continued)
<PAGE>

NOTES TO FINANCIAL STATEMENTS-CONTINUED
PAMET SYSTEMS, INC.

<TABLE>
<CAPTION>
NOTE G--STOCKHOLDERS' EQUITY (continued)

Stock option activity for the 1998 Stock Option Plan for the two year period
ended December 31, 2000 is as follows:
                                                        Weighted Average
                                                  ----------------------------
                           Number Exercise Price Exercise  Fair Value  Remain-
                       Of Options      Per Share    Price    at Grant ing Life
                       ---------- -------------- --------  ---------- --------
<S>                    <S>        <S>            <S>      <S>         <S>
Outstanding
January 1, 1999            92,500    $1.37-$1.87    $1.52                5.54
                                                                        years
Granted to Officers        27,250    $1.50-$2.50    $2.32 $1.24-$2.07
Granted to Employees      145,250    $1.50-$3.19    $1.95 $1.24-$2.65
Exercised                  (3,250)         $1.87    $1.87
Cancelled                 (15,000)         $1.37    $1.37
                          -------     ----------
Outstanding
December 31, 1999         246,750    $1.37-$1.87    $1.87                 5.12
                                                                         years
Exercised                 (14,125)   $1.50-$2.50    $1.58
Cancelled                 (27,375)   $1.50-$2.50    $1.83
                           ------     ----------
Outstanding
December 31, 2000         205,250    $1.37-$3.19    $1.89                 4.91
                                                                         years
                          =======     ==========
Exercisable at
December 31, 2000         140,500    $1.37-$3.19    $1.86
                          =======     ==========     ====
Exercisable at
December 31, 1999          84,375    $1.37-$3.19    $2.02
                           ======     ==========     ====
Available for Grant at
December 31, 2000          27,375
                           ======
Available for Grant at
December 31, 1999              --
                           ======

</TABLE>

During 1999 and 2000 the Company issued stock options to directors outside of
any formalized plan. These options, of which none had been exercised at
December 31, 2000, are exercisable within a ten-year period from the date of
the grant, and are generally fully exercisable when issued. The options are
not transferable except by will or domestic relations order. The option price
per share is not less than the fair market value of the shares on the date of
the grant.

                                        (continued)

<PAGE>

NOTES TO FINANCIAL STATEMENTS-CONTINUED
PAMET SYSTEMS, INC.

<TABLE>
<CAPTION>
NOTE G--STOCKHOLDERS' EQUITY (continued)

Stock option activity for the directors outside of any formalized plan for the
two year period ended December 31, 2000 is as follows:

                                                      Weighted Average
                                                  ----------------------------
                         Number Exercise Price  Exercise   Fair Value  Remain-
                     Of Options      per Share     Price     at Grant ing Life
                     ---------- --------------  --------   ---------- --------
<S>                  <S>        <S>             <S>       <S>         <S>
Outstanding
January 1, 1999              --             --        --
Granted to Directors     53,000    $1.37-$2.50     $1.46  $1.13-$2.07
                         ------     ----------
Outstanding
December 31, 1999        53,000    $1.37-$2.50     $1.43               5 years

Granted to Directors     30,000    $2.00-$3.88     $2.38  $1.62-$3.15
                         ------     ----------

Outstanding
December 31, 2000        83,000    $1.37-$3.88     $1.77                  3.82
                                                                         years
                         ======     ==========
Exercisable at
December 31, 2000        83,000    $1.37-$3.88     $1.77
                         ======     ==========
Exercisable at
December 31, 1999        37,700    $1.37-$2.50     $1.46
                         ======     ==========
Available For Grant
at December 31, 2000    167,000
                        =======
Available For Grant
at December 31, 1999    197,000
                        =======

</TABLE>
Subsequent to December 31, 2000, options representing 2,000 shares were
granted to a director at an exercise price of $1.87.





                                        (continued)

<PAGE>

NOTES TO FINANCIAL STATEMENTS-CONTINUED
PAMET SYSTEMS, INC.

NOTE G--STOCKHOLDERS' EQUITY (continued)

The Company issued additional stock options and warrants outside of any
formalized plan. The stock options are exercisable within a ten-year period
from the date of grant and are generally fully exercisable when issued to
directors and exercisable 25% per year and continuing over four years for
employees (for options based on continual employment) and consultants. The
warrants are exercisable within a five year period from the date of grant and
are generally fully exercisable when issued. The options and warrants are not
transferable except by will or domestic relations order. The option or warrant
price per share is not less than the fair market value of the shares on the
date of grant.

<TABLE>
<CAPTION>
Stock option and warrant activity for stock options and warrants issued
outside a formalized plan for the two year period ended December 31, 2000 is
as follows:

                                                        Weighted Average
                                                 -----------------------------
                        Number of
                         Options/ Exercise Price Exercise  Fair Value  Remain-
                         Warrants      Per Share    Price    at Grant ing Life
                        --------- -------------- --------  ---------- --------
<S>                     <S>       <S>            <S>      <S>         <S>
Outstanding
  January l, 1999         849,163     $.68-$4.75    $2.45                 4.80
                                                                         years
Options Granted to
  Officer                  56,200          $2.50    $2.50       $2.07
Warrants Granted to
  Officers                  2,500          $2.50    $2.50       $2.07
Warrants Granted to
  Directors               162,546    $2.50-$3.19    $2.57 $2.07-$2.65
Warrants Granted to
  Convertible Debt
  Holders                 444,000          $2.50    $2.50       $2.07
Warrants Granted to
  new Stockholders        325,000          $2.50    $2.50       $2.08
Warrants Granted to
  Consultant/Debt
  Holders for goods
  and services
  provided                 37,500    $2.19-$2.50    $2.44 $1.82-$2.07
Options Exercised          (1,000)         $2.75    $2.75
Warrants Exercised        (87,000)   $0.80-$2.00    $1.70
Warrants Cancelled         (8,000)         $0.80
                          -------     ----------
Outstanding
December 31,1999        1,780,909    $0.68-$4.75    $2.52                 4.34
                                                                         years
Options Granted to
  Officer                  25,000          $3.88    $3.88       $3.15
Warrants Granted to
  Officers                  6,250          $3.00    $3.00       $2.43
Warrants Granted to
  Directors                46,875          $3.00    $3.00       $2.43
Warrants Granted to
  Stockholders for new
  equity financing        316,666    $2.50-$3.50    $2.50 $2.03-$2.84

</TABLE>


                                        (continued)
<PAGE>

NOTES TO FINANCIAL STATEMENTS-CONTINUED
PAMET SYSTEMS, INC.

<TABLE>
<CAPTION>
NOTE G--STOCKHOLDERS' EQUITY (continued)
                                                       Weighted Average
                                                  ----------------------------
                       Number of
                        Options/  Exercise Price  Exercise Fair Value  Remain-
                        Warrants       Per Share     Price   at Grant  ingLife
                       ---------  --------------  -------- ----------  -------
<S>                    <S>        <S>             <S>      <S>         <S>
Options Exercised          (3000)          $2.75     $2.75
Warrants Exercised       (52,416)    $0.80-$2.50     $2.10
Warrants Cancelled        (2,584)          $0.80     $0.80
Options Cancelled        (10,000)    $2.75-$3.25     $3.00
                          ------      ----------      ----
Outstanding
 December 31, 2000     2,107,700     $2.19-$3.19     $2.61                3.79
                                                                         years
                       =========      ==========      ====
Exercisable at
  December 31, 2000    2,070,075     $0.68-$4.75     $2.59
                       =========      ==========      ====
Exercisable at
  December 31, 1999    1,649,459     $0.68-$4.75     $2.48
                       =========      ==========      ====
</TABLE>

Subsequent to December 31, 2000, options representing 28,175 shares were
granted to a new stockholder at an exercise price of $2.50 and options
representing 466,666 shares were granted to two new convertible debt holders
at an exercise price of $2.00.

In 2000, the Company adopted a Stock Option Plan under which the Board of
Directors may grant incentive or non-qualified stock options to employees,
directors and consultants of the Company. The maximum number of shares of
stock subject to issuance under the 2000 Stock Option Plan is 1,300,000
shares. These options, of which none had been exercised at December 31, 2000,
are exercisable within a ten-year period from the date of the grant, and are
generally fully exercisable when issued to directors and exercisable 25% per
year and continuing over four years for employees (based on continual
employment) and consultants. The options are not transferable except by will
or domestic relations order. The option price per share under the Plan is not
less than the fair market value of the shares on the date of grant.

<TABLE>
<CAPTION>
                                                      Weighted Average
                                                 -----------------------------
                      Number of  Exercise Price  Exercise  Fair Value  Remain-
                        Options       Per Share     Price    at Grant ing Life
                      ---------  --------------  --------  ---------- --------
<S>                   <S>        <S>             <S>       <S>        <S>
Outstanding
January 1, 2000              --              --        --
Options Granted to
   Officers             165,000     $2.00-$2.12     $2.02 $1.62-$1.72
Options Granted to
  Employees             372,625     $2.00-$4.13     $2.07 $1.62-$3.35
                        -------      ----------      ----  ----------
</TABLE>

                                        (continued)

<PAGE>

<TABLE>
<CAPTION>
NOTES TO FINANCIAL STATEMENTS-CONTINUED
PAMET SYSTEMS, INC.

NOTE G--STOCKHOLDERS' EQUITY (continued)
                                                        Weighted Average
                                                 -----------------------------

                      Number of  Exercise Price  Exercise  Fair Value  Remain-
                        Options       Per Share     Price    at Grant ing Life
                      ---------  --------------  --------  ---------- --------
<S>                   <S>        <S>             <S>       <S>        <S>
Options Outstanding
December 31, 2000       537,625     $2.00-$4.13     $2.05                 6.39
                                                                         years
                        =======      ==========
Exercisable at
  December 31, 2000     138,625     $2.00-$4.13     $2.05
                        =======      ==========
Available for Grant
December 31, 2000       762,375
                        =======

</TABLE>

NOTE H-EARNINGS PER SHARE DISCLOSURE

Earnings per share disclosures for the two year period ended December 31, 2000
are as follows:

<TABLE>
<CAPTION>
                                        For the Year Ended December 31, 2000
                                        ------------------------------------
                                                        Weighted-  Per Share
                                         Income    Average Shares     Amount
                                        -------    --------------  ---------
<S>                                 <S>            <S>             <S>
Basic loss per common share
        Income available to common
          stockholders              $(2,167,035)        3,778,437    $(0.57)
                                      =========         =========      ====

                                        For the Year Ended December 31, 1999
                                        ------------------------------------
                                                        Weighted-  Per Share
                                         Income    Average Shares     Amount
                                        -------    --------------  ---------
Basic loss per common share
        Income available to common
          stockholders              $(2,836,470)        2,838,728    $(1.00)
                                      =========         =========      ====
</TABLE>

NOTE I-INCOME TAXES

During 2000, the Company recorded deferred tax assets for the benefit of net
operating losses in the amount of $396,000. The cumulative amount of these
assets, which is $2,234,000 at December 31, 2000 is fully reserved. Due to the
Company's history of operating losses, management has concluded that
realization of the benefit is not likely.





                                                        (continued)

<PAGE>

NOTES TO FINANCIAL STATEMENTS-CONTINUED
PAMET SYSTEMS, INC.

NOTE I-INCOME TAXES (continued)

At December 31, 2000, the Company has federal net operating loss carryforwards
of $10,981,000 that expire beginning in the year 2005. Additionally, the
Company has Massachusetts net operating losses to carry forward, which expire
as follows:

<TABLE>
<CAPTION>
                    <S>                             <S>
                    Year Ending
                    December 31,                        Amount
                    -----------                         ------
                        2002                        $  980,000
                        2003                         1,752,000
                        2004                         2,632,000
                        2005                         1,901,000
                                                     ---------
                                                    $7,265,000
                                                     =========
</TABLE>

NOTE J-COMMITMENTS AND CONTINGENCIES

Lease

During 1999, the Company entered into a real estate transaction in which it
sold its main operating facility and land to an unaffiliated third party and
leased back the property. The lease is being accounted for as an operating
lease. The transaction resulted in a gain of approximately $298,000 that the
Company has deferred and will recognize as a reduction of rent expense over
the term of the lease (see Note B). The lease agreement is for 7 years through
August 2006 with a 5 year renewal option available. The monthly base rent for
the first three years is $12,997. For years four through seven the monthly
base rent increases to $14,564. For the second through seventh year, rent may
be further increased by multiplying the base rent for the preceding year by
the percentage increase in the Consumer Price Index for Urban Wage Earners and
Clerical Workers, up to a maximum increase of three percent per annum.

Future minimum lease payments are as follows:

<TABLE>
<CAPTION>
                   <S>                          <S>
                    Year ending
                   December 31,                    Amount
                   ------------                    ------
                       2001                      $160,639
                       2002                       165,348
                       2003                       174,765
                       2004                       174,765
                       2005                       174,765
                   Thereafter                     104,291
                                                  -------
TOTAL                                            $954,573
                                                  =======

</TABLE>

                                                        (continued)
<PAGE>

NOTES TO FINANCIAL STATEMENTS-CONTINUED
PAMET SYSTEMS, INC.

NOTE J-COMMITMENTS AND CONTINGENCIES (continued)

Employment Contracts

On May 3, 1999 the Company entered into a joint venture and service agreement
with Hanahan Computer Designs. As part of the agreement Pamet has obtained the
right to a product and has an employment agreement with the owner of Hanahan
Computer Designs.

Under the joint venture agreement, Hanahan Computer Designs will receive
royalties of fifty percent of gross sales of the product until June 30, 2002,
subject to a maximum aggregate royalty payment of $170,000. Thereafter, the
owner of Hanahan Computer Designs will receive a thirty percent commission on
all of his sales of this product. There were no sales of this product in the
current fiscal year.

Under the Hanahan employment agreement, which runs through June 30, 2002, a
minimum salary of $90,000 per annum is payable. The employee also is eligible
for an annual bonus of up to 15% of his annual salary.

In addition, the Company has employment agreements with two key management
employees through May 2002 that total $273,500 per year.

NOTE K-SIGNIFICANT CUSTOMERS

Amounts due from three customers represented approximately 24% of total
accounts receivable, trade outstanding at December 31, 2000.

Sales to one customer represented approximately 14.6% of total revenues for
the year ended December 31, 2000 and 12% of total revenues for the year ended
December 31, 1999.

NOTE L-MAJOR SUPPLIER

The Company obtained approximately 35% of its merchandise from one supplier in
2000. Management believes that if this supplier ceased providing software, the
Company could find alternative suppliers, although there would be a short
interruption of this line of business as the new software was integrated with
the Company's products.


<PAGE>

NOTES TO FINANCIAL STATEMENTS-CONTINUED
PAMET SYSTEMS, INC.

NOTE M--PROFIT SHARING PLAN

The Company has a qualified contributory profit sharing 401(k) plan. The plan
covers all employees meeting certain age and service requirements. Employee
contributions are voluntary, based on specific percentages of compensation.
The plan also provides for contributions by the Company upon approval of the
Board of Directors. During 2000 and 1999, the Board elected to make
contributions equal to 15% of employee contributions. The employees' and
employer's contributions may not exceed maximum amounts established by the
Internal Revenue Code. Total Company contributions to the plan were $12,164
during 2000 and $11,183 during 1999.

NOTE N-RESEARCH AND DEVELOPMENT

Research and development costs in the current year represent costs associated
with developing a Microsoft Windows NT computing platform for the Company's
current computer applications as well as developing accompanying software
support applications for the NT system.

Included in personnel costs is approximately $815,000 relating to personnel
who have worked exclusively on the development of the Company's NT computing
platform and supporting applications during fiscal year 2000.


See independent auditor's report


Item 8. Changes in and Disagreements with Accountants on Accounting
        and Financial Disclosure.

        Not applicable.

<PAGE>

PART III


Items 9, 10, 11, 12.

If the Registrant's definitive proxy statement is filed within 120 days of the
close of the Registrant's fiscal year ended December 31, 2000, the information
called for by Items 9, 10, 11, and 12 of Part III shall be deemed incorporated
herein by reference to the Registrant's definitive proxy statement relating to
the Annual Meeting of Stockholders.


Item 13.        Exhibits. Financial Statement Schedules, and Reports on Form
8-K

        (a)     Exhibits

3.1.1 Restated and Amended Articles of Organization (filed by reference to
Exhibit 3.1 to the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1990).
3.2 By-Laws, as amended (filed by reference to Exhibit 3.2 to Registration
Statement No. 33-36989).
4.1 Specimen Common Stock Certificate (filed by reference to Exhibit 4.2 to
Registration Statement No. 33-36989).
4.2 Warrant issued to Rogow Opportunity Capital dated March 2, 1998 (filed by
reference to Exhibit 4.3 to the Company's Quarterly Report of Form 10-QSB for
the Quarter Ended March 31, 1998).
4.3 Convertible Note issued to Rogow Opportunity Capital LLC dated November 6,
1998.
4.4 Warrant issued to Rogow Opportunity Capital LLC dated November 6, 1998.
4.5 Convertible Note issued to Robboy Associates LLC dated November 6, 1998.
4.6 Warrant issued to Robboy Associates LLC dated November 6, 1998.
4.7 Convertible Note issued to William James Bell 1993 Trust dated November
13, 1998.
4.8 Warrant issued to William James Bell 1993 Trust dated November 13, 1998.
4.9 Convertible Note issued to Gene Raphalean dated December 8, 1998.
4.10 Warrant issued to Gene Raphalean dated December 8, 1998.
4.11 Convertible Note issued to Donald M. Liddell, Jr. dated December 10,
1998.
4.12 Warrant issued to Donald M. Liddell, Jr. dated December 10, 1998.
4.13 Convertible Note issued to Joseph Terrence Waters dated December 14,
1998.
4.14 Warrant issued to Joseph Terrence Waters dated December 14, 1998.
4.15 Convertible Note issued to William James Bell 1993 Trust dated February
8, 1999.
4.16 Warrant issued to William James Bell 1993 Trust dated February 8, 1999.
4.17 Convertible Note issued to Stephen Wilder dated January 22, 1999.
4.18 Warrant issued to Stephen Wilder dated January 22, 1999.
4.19 Convertible Note issued to West Country Partners dated May 10, 1999.
4.20 Warrant issued to West Country Partners dated May 10, 1999.
4.21 Convertible Note issued to BSI SA dated May 14, 1999.
4.22 Warrant issued to BSI SA dated May 14, 1999.
4.23 Warrant issued to West Country Partners dated November 19, 1999.
4.24 Warrant issued to BSI SA dated November 29, 1999.
4.25 Warrant issued to Leonardo Capital fund dated December 14, 1999.
4.26 Warrant issued to West Country Partners dated March 29, 2000
4.27 Warrant issued to BSI SA dated April 11, 2000
4.28 Warrant issued to West  Country Partners dated August 31, 2000
4.29 Warrant issued to West County Partners dated November 6, 2000
10.1 Stock Option Plan (filed by reference to Exhibit 10.3 to Registration
Statement No. 33-36989).
10.2 Form of License Agreement (filed by reference to Exhibit 10.5 to
Registration Statement No. 33-42819).
10.3 Form of Employment agreement between the Registrant and David T. McKay
(Filed by reference to Exhibit 10.14 to the Company's Annual Report of Form
10-KSB for the Fiscal Year Ended December 31, 1997).
10.4 Form of Employment agreement between the Registrant and Richard C. Becker
(Filed by reference to Exhibit 10.15 to the Company's Annual Report of Form
10-KSB for the Fiscal Year Ended December 31, 1997).
10.5 1998 Stock Option Plan (Filed by reference in the 1998 Proxy Statement
dated May 14, 1998).
10.6 2000 Stock Option Plan  (Filed by reference in the 2000 Proxy Statement
dated June 13, 2000).
10.12 Silicon Valley Financial Services Accounts Receivable Purchase Agreement
dated April 14, 1998 (Filed by reference to Exhibit 10 to the Company's
Quarterly Report of Form 10-QSB for the Quarter Ended June 30, 1998).
23      Consent of Carlin, Charron & Rosen LLP
27      Financial Data Schedule

(b) Reports on Form 8-K
        none

SIGNATURES

        In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.


                PAMET SYSTEMS, INC.
                   (Registrant)

                   By: BRUCE J. ROGOW
                 Name: Bruce J. Rogow
                Title: Chairman


Date April 13, 2001

        Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.

     Name       Title                                           Date

BRUCE J. ROGOW  Chairman of the Board                           April 13, 2001
                                       ______________________
                                           Bruce J. Rogow



DAVID T. MCKAY  President and Chief                             April 13, 2001
                 Executive Officer     ________________________
                                           David T. McKay


RICHARD C.     Vice President, Finance                          April 13, 2001
 BECKER        and Administration,     ________________________
               Treasurer, and Director    Richard C. Becker
               (Principal Financial and
               Accounting Officer)


STANLEY J.     Director                                         April 13, 2001
 ROBBOY, M.D.                          ________________________
                                        Stanley J. Robboy, M.D.


DAVINDER SETHI Director                                         April 13, 2001
                                       ________________________
                                            Davinder Sethi


<PAGE>

  Exhibit 4.28: Warrant issued to West Country Partners Dated November 6, 2000


                                  WARRANT

NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF
THIS WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AND
NEITHER THIS WARRANT NOR SUCH SHARES MAY BE SOLD, ENCUMBERED OR OTHERWISE
TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH
ACT OR AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENT, AND, IF AN EXEMPTION
SHALL BE APPLICABLE, THE HOLDER SHALL HAVE DELIVERED AN OPINION OF COUNSEL
ACCEPTABLE TO THE COMPANY (WHICH ACCEPTANCE SHALL NOT BE UNREASONABLY
WITHHELD) THAT SUCH REGISTRATION IS NOT REQUIRED.


Void after 5:00 p.m. Eastern Standard Time, on November 5, 2005.


                      WARRANT TO PURCHASE COMMON STOCK

                                    OF

                            PAMET SYSTEMS, INC.


        FOR VALUE RECEIVED, PAMET SYSTEMS, INC. (the "Company"), a
Massachusetts corporation, hereby certifies that  West Country Partners, a
California Limited Partnership of which James S. Schmitt is the General
Partner, with its address at 1917 Brittany Park, Camarillo, CA 93012, or its
permitted assigns, is entitled to purchase from the Company, at any time or
from time to time commencing November 6, 2000, and prior to 5:00 P.M., Eastern
Standard Time, on November 5, 2005, a total of One Hundred Thousand (100,000)
fully paid and nonassessable shares of common stock, par value $.01 per share
("Common Stock"), of the Company for an aggregate purchase price of Two
Hundred Fifty Thousand Dollars ($250,000) (computed on the basis of
$2.50 per share).  (Hereinafter, (i) said Common Stock, together with any
other equity securities which may be issued by the Company with respect
thereto or in substitution therefor, is referred to as the "Common Stock,"
(ii) the shares of the Common Stock purchasable hereunder are referred to as
the "Warrant Shares," (iii) the aggregate purchase price payable hereunder for
the Warrant Shares is referred to as the "Aggregate Warrant Price," (iv) the
price payable hereunder for each of the Warrant Shares is referred to as the
"Per Share Warrant Price," (v) this Warrant, and all warrants hereafter issued
in exchange or substitution for this Warrant are referred to as the "Warrant"
and (vi) the holder of this Warrant is referred to as the "Holder.")  The
number of Warrant Shares for which this Warrant is exercisable is subject to
adjustment as hereinafter provided.

        This Warrant is issued by the Company pursuant to the Securities
Purchase Agreement, dated as of the date hereof, among the Company and West
Country Partners (the "Securities Purchase Agreement").  Capitalized terms
used but not defined shall have the respective meanings ascribed to them in
the Securities Purchase Agreement.

        1.      Exercise of Warrant.

        (a)     This Warrant may be exercised, in whole at any time or in part
from time to time, commencing November 6, 2000, and prior to 5:00 P.M.,
Eastern Standard Time, on November 5, 2005, by the Holder of this Warrant by
the surrender of this Warrant (with the subscription form at the end hereof
duly executed) at the address set forth in Subsection 9(a) hereof, together
with proper payment of the Aggregate Warrant Price, or the proportionate part
thereof if this Warrant is exercised in part.

        (b)     The Aggregate Warrant Price or Per Share Warrant Price shall
be paid in cash by certified or official bank check payable to the order of
the Company.

        (c)     Each exercise of this Warrant shall be deemed to have been
effected immediately prior to the close of business on the day on which the
Warrant shall have been surrendered to the Company as provided in subsection
1(a) above (an "Exercise Date").  At such time, the person or persons in whose
name or names any certificates for Warrant Shares shall be issuable upon such
exercise as provided in subsection 1(d) below shall be deemed to have become
the holder or holders of record of the Warrant Shares represented by such
certificates.

        (d)     If this Warrant is exercised in part, the Holder shall be
entitled to receive a new Warrant covering the number of Warrant Shares in
respect of which this Warrant has not been exercised and setting forth the
proportionate part of the Aggregate Warrant Price applicable to such Warrant
Shares.  Upon such surrender of this Warrant, the Company will (a) issue a
certificate or certificates in the name of the Holder for the shares of the
Common Stock to which the Holder shall be entitled, and (b) deliver the
proportionate part thereof if this Warrant is exercised in part, pursuant to
the provisions of the Warrant.

        (e)     No fractional shares or scrip representing fractional shares
shall be issued upon the exercise of this Warrant.  With respect to any
fraction of a share called for upon any exercise hereof, the Company shall pay
to the Holder an amount in cash equal to such fraction multiplied by the fair
value of a share.

        2.      Reservation of Warrant Shares.  The Company agrees that, prior
to the expiration of this Warrant, the Company will at all times have
authorized and in reserve, and will keep available, solely for issuance or
delivery upon the exercise of this Warrant, the shares of the Common Stock as
from time to time shall be receivable upon the exercise of this Warrant.

        3.      Adjustments.

       (a)     In case the Company shall hereafter (i) pay a dividend or make
a distribution on its capital stock in shares of Common Stock, (ii) subdivide
its outstanding shares of Common Stock into a greater number of shares, (iii)
combine its outstanding shares of Common Stock into a smaller number of shares
or (iv) issue by reclassification of its Common Stock any shares of capital
stock of the Company, the number of Warrant Shares for which this Warrant may
be exercised shall be adjusted so that if the Holder surrendered this Warrant
for exercise after such action the Holder would be entitled to receive the
number of shares of Common Stock or other capital stock of the Company which
he would have been entitled to receive had such Warrant been exercised
immediately prior to such action.  An adjustment made pursuant to this
subsection (a) shall become effective immediately after the record date in the
case of a dividend or distribution and shall become effective immediately
after the effective date in the case of a subdivision, combination or
reclassification.  If, as a result of an adjustment made pursuant to this
subsection (a), the Holder of this Warrant shall become entitled to receive
shares of two or more classes of capital stock or shares of Common Stock and
other capital stock of the Company, the Board of Directors (whose
determination shall be conclusive and shall be described in a written notice
to the Holder of this Warrant promptly after such adjustment) shall determine
the allocation of the adjusted Per Share Warrant Price between or among shares
of such classes of capital stock or shares of Common Stock and other capital
stock.

        (b)     In case of any consolidation or merger to which the Company is
a party other than a merger or consolidation in which the Company is the
continuing corporation, or in case of any sale or conveyance to another entity
of the property of the Company as an entirety or substantially as an entirety,
or in the case of any statutory exchange of securities with another
corporation (including any exchange effected in connection with a merger of a
third corporation into the Company), the holder shall have the right
thereafter to exercise this Warrant for the kind and amount of securities,
cash or other property which he would have owned or have been entitled to
receive immediately after such consolidation, merger, statutory exchange, sale
or conveyance had such Warrant been exercised immediately prior to the
effective date of such consolidation, merger, statutory exchange, sale or
conveyance and in any such case, if necessary, appropriate adjustment shall be
made in the application of the provisions set forth in this Section 3 with
respect to the rights and interests thereafter of the Holder to the end that
the provisions set forth in this Section 3 shall thereafter correspondingly be
made applicable, as nearly as may reasonably be, in relation to any shares of
stock or other securities or property thereafter deliverable on the conversion
of this Warrant.  The above provisions of this subsection (b) shall similarly
apply to successive consolidations, mergers, statutory exchanges, sales or
conveyances.  Notice of any such consolidation, merger, statutory exchange,
sale or conveyance and of said provisions so proposed to be made, shall be
mailed to the Holder not less than 30 days prior to such event.  A sale of all
or substantially all of the assets of the Company for a consideration
consisting primarily of securities shall be deemed a consolidation or merger
for the foregoing purposes.

        (c)     In the event of any adjustment to the number of Warrant Shares
issuable upon exercise of this Warrant, the Per Share Warrant Price shall be
adjusted by multiplying the Per Share Warrant Price in effect immediately
prior to such adjustment by a fraction the numerator of which is the aggregate
number of Warrant Shares for which this Warrant may be exercised immediately
prior to such adjustment and the denominator of which is the aggregate number
of Warrant Shares for which this Warrant may be exercised immediately after
such adjustment.

        (d)     Whenever the Per Share Warrant Price is adjusted as provided
in this Warrant and upon any modification of the rights of the Holder of this
Warrant in accordance with this Section 3, the Company shall promptly prepare
a certificate of an officer of the Company, setting forth the Per Share
Warrant Price and the number of Warrant Shares after such adjustment or
modification, a brief statement of the facts requiring such adjustment or
modification and the manner of computing the same and cause a copy of such
certificate to be mailed to the Holder.

        4.      Fully Paid Stock; Taxes.  The Company agrees that the shares
of the Common Stock represented by each and every certificate for Warrant
Shares delivered on the proper exercise of this Warrant shall, at the time of
such delivery, be validly issued and outstanding, fully paid and
nonassessable, and not subject to preemptive rights, and the Company will take
all such actions as may be necessary to assure that the par value or stated
value, if any, per share of the Common Stock is at all times equal to or less
than the then Per Share Warrant Price.  Subject to Section 6(e) hereof, the
Company further covenants and agrees that it will pay, when due and payable,
any and all Federal and state stamp, original issue or similar taxes that may
be payable in respect of the issuance of any Warrant Shares or certificates
therefor.  The Holder covenants and agrees that it shall pay, when due and
payable, any and all federal, state and local income or similar taxes that may
be payable in respect of the issuance of any Warrant Shares or certificates
therefor.

        5.      Transfer

        (a)     Securities Laws.  Neither this Warrant nor the Warrant Shares
issuable upon the exercise hereof have been registered under the Securities
Act of 1933, as amended (the "Securities Act"), or under any state securities
laws and unless so registered may not be transferred, sold, pledged,
hypothecated or otherwise disposed of unless an exemption from such
registration is available.  In the event the Holder desires to transfer this
Warrant or any of the Warrant Shares issued, the Holder must give the Company
prior written notice of such proposed transfer including the name and address
of the proposed transferee.  Such transfer may be made only either (i) upon
publication by the Securities and Exchange Commission (the "Commission") of a
ruling, interpretation, opinion or "no action letter" based upon facts
presented to said Commission, or (ii) upon receipt by the Company of an
opinion of counsel acceptable to the Company to the effect that the proposed
transfer will not violate the provisions of the Securities Act, the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), or the rules and
regulations promulgated under either such act, or to the effect that the
Warrant or Warrant Shares to be sold or transferred have been registered under
the Securities Act of 1933, as amended, and that there is in effect a current
prospectus meeting the requirements of Subsection 11(a) of the Securities Act,
which is being or will be delivered to the purchaser or transferee at or prior
to the time of delivery of the certificates evidencing the Warrant or Warrant
Shares to be sold or transferred.

        (b)     Conditions to Transfer.  Prior to any such proposed transfer
(including, without limitation, a transfer by will or pursuant to the laws of
descent and distribution), and as a condition thereto, if such transfer is not
made pursuant to an effective registration statement under the Securities Act,
the Holder will, if requested by the Company, deliver to the Company (i) an
investment covenant, in form and substance equivalent to that signed by the
original Holder of this Warrant, signed by the proposed transferee, (ii) an
agreement by such transferee to the restrictive investment legend set forth
herein on the certificate or certificates representing the securities acquired
by such transferee, (iii) an agreement by such transferee that the Company may
place a "stop transfer order" with its transfer agent or registrar, and (iv)
an agreement by the transferee to indemnify the Company to the same extent as
set forth in the next succeeding paragraph.

        (c)     Indemnity.  The Holder acknowledges that the Holder
understands the meaning and legal consequences of this Section 6, and the
Holder hereby agrees to indemnify and hold harmless the Company, its
representatives and each officer and director thereof from and against any and
all loss, damage or liability (including all attorneys' fees and costs
incurred in enforcing this indemnity provision) due to or arising out of (a)
the inaccuracy of any representation or the breach of any warranty of the
Holder contained in, or any other breach by the Holder of, this Warrant, (b)
any transfer of the Warrant or (c) any untrue statement or omission to state
any material fact in connection with the investment representations or with
respect to the facts and representations supplied by the Holder to counsel to
the Company upon which its opinion as to a proposed transfer shall have been
based.

        (d)     Transfer.  Upon surrender of this Warrant to the Company or at
the office of its stock transfer agent, if any, with assignment documentation
duly executed and funds sufficient to pay any transfer tax, and upon
compliance with the foregoing provisions, the Company shall, without charge,
execute and deliver a new Warrant in the name of the assignee named in such
instrument of assignment, and this Warrant shall promptly be canceled.  Any
assignment, transfer, pledge, hypothecation or other disposition of this
Warrant attempted contrary to the provisions of this Warrant, or any levy of
execution, attachment or other process attempted upon the Warrant, shall be
null and void and without effect.

        (e)     Legend and Stop Transfer Orders.  Unless the Warrant Shares
have been registered under the Securities Act, upon exercise of any part of
the Warrant and the issuance of any of the Warrant Shares, the Company shall
instruct its transfer agent to enter stop transfer orders with respect to such
shares, and all certificates representing Warrant Shares shall bear on the
face thereof substantially the following legend, insofar as is consistent with
Massachusetts law:

                "The shares of common stock represented by this certificate
                have not been registered under the Securities Act of 1933, as
                amended, and may not be sold, offered for sale, assigned,
                transferred or otherwise disposed of unless registered
                pursuant to the provisions of that Act or an opinion of
                counsel to the Company is obtained stating that such
                disposition is incompliance with an available exemption from
                such registration."

        6.      Loss, etc. of Warrant.  Upon receipt of evidence satisfactory
to the Company of the loss, theft, destruction or mutilation of this Warrant,
and of indemnity reasonably satisfactory to the Company, if lost, stolen or
destroyed, and upon surrender and cancellation of this Warrant if mutilated,
the Company shall execute and deliver to the Holder a new Warrant of like
date, tenor and denomination.

        7.      Warrant Holder Not Shareholder.  Except as otherwise provided
herein, this Warrant does not confer upon the Holder any right to vote or to
consent to or receive notice as a shareholder of the Company, as such, in
respect of any matters whatsoever, or any other rights or liabilities as a
shareholder, prior to the exercise hereof.

        8.      Communication.  No notice or other communication under this
Warrant shall be effective unless the same is in writing and is mailed by
first-class mail, postage prepaid, addressed to:

        (a)     the Company at 1000 Main Street, Acton, Massachusetts  01720,
or such other address as the Company has designated in writing to the
Holder,or

        (b)     the Holder at the address contained in the first paragraph of
this Warrant, or such other address as the Holder has designated in writing to
the Company.

        9.      Headings.  The headings of this Warrant have been inserted as
a matter of convenience and shall not affect the construction hereof.

        10.     Applicable Law.  This Warrant shall be governed by and
construed in accordance with the law of the Commonwealth of Massachusetts
without giving effect to the principles of conflict of laws thereof.
IN WITNESS WHEREOF, PAMET SYSTEMS, INC., has caused this Warrant to be signed
by a duly authorized officer as of this 6th day of November, 2000.


ATTEST:                                 PAMET SYSTEMS, INC.



_______________________                 By:___________________________________
                                             Name:   David T. McKay
                                             Title:  President & CEO

<PAGE>


                                SUBSCRIPTION


        The undersigned, __________________________________________, pursuant
to the provisions of the foregoing Warrant, hereby agrees to subscribe for the
purchase of _________________________ shares of the Common Stock of PAMET
SYSTEMS, INC. covered by said Warrant, and makes payment therefor in full at
the price per share provided by said Warrant.



Dated __________________               Signature__________________________

                                       Address____________________________

                                              ____________________________



                                 ASSIGNMENT

        FOR VALUE RECEIVED _________________________ hereby sells, assigns and
transfers unto _________________________ the foregoing Warrant and all rights
evidenced thereby, and does irrevocably constitute and appoint
_________________________, attorney, to transfer said Warrant on the books of
PAMET SYSTEMS, INC.

Dated __________________              Signature_________________________


                                       Address___________________________

                                              ___________________________


                             PARTIAL ASSIGNMENT

        FOR VALUE RECEIVED _________________________ hereby assigns and
transfers unto _________________________ the right to purchase
_________________________ shares of the Common Stock of PAMET SYSTEMS, INC. by
the foregoing Warrant, and a proportionate part of said Warrant and the rights
evidenced hereby, and does irrevocably constitute and appoint
_________________________, attorney, to transfer that part of said Warrant on
the books of PAMET SYSTEMS, INC.


Dated ___________________              Signature__________________________


                                       Address____________________________

                                              ____________________________



<PAGE>

Exhibit 4.29


Consent of Independent Auditors



We consent to the incorporation by reference in the Registration Statement
(Form S-8 No. 33-41029) pertaining to the Pamet Systems, Inc. 1990 Stock
Option Plan of our report dated March 29, 2001, with respect to the financial
statements of Pamet Systems, Inc. included in its Annual Report (Form 10-KSB)
for the year ended December 31, 2000, filed with Securities and Exchange
Commission.




        Carlin, Charron & Rosen LLP



Worcester, Massachusetts
March 29, 2001